CSG HOLDING CO., LTD.
ANNUAL REPORT 2018
Chairman of the Board:
CHEN LIN
April 2019
Section I Important Notice, Content and Paraphrase
Board of Directors and the Supervisory Committee of CSG Holding Co., Ltd. (hereinafter referredto as the Company) and its directors, supervisors and senior executives hereby confirm that thereare no any fictitious statements, misleading statements, or important omissions carried in this report,and shall take all responsibilities, individual and/or joint, for the facticity, accuracy andcompleteness of the whole contents.Ms. Chen Lin, Chairman of the Board, Mr. Wang Jian, responsible person in charge of accountingand Ms.Wang Wenxin, principal of the financial department (accounting officer) confirm that theFinancial Report enclosed in this 2018 Annual Report is true, accurate and complete.All directors were present at the meeting of the Board for deliberating the annual report of theCompany in person.This report involves future plans and some other forward-looking statements, which shall not beconsidered as virtual promises to investors. Investors are kindly reminded to pay attention topossible risks.Details of the risk factors and countermeasures of future development have been well-described inthis report, please find in Section IV Business Discussion and Analysis.The deliberated and approved plan of profit distribution and capital reserve converted into sharecapital in the Board Meeting is distributing cash dividend of RMB 0.50 yuan (tax included) forevery 10 shares to all shareholders based on 2,863,277,201 shares of the total currently share capital.Meanwhile the Company will transfer capital reserve into capital with 1 shares for every 10 sharesto all shareholders based on 2,863,277,201 shares of the total currently share capital. (The actualamount of the cash dividend distributed and capital reserve transferred will be determined accordingto the total share capital on the capital reserved registration date for profit distributionimplementation.)This report is prepared both in Chinese and English. Should there be any inconsistency between theChinese and English versions, the Chinese version shall prevail.
Content
Section I Important Notice, Content and Paraphrase ...... 1
Section II Company Profile & Financial Highlights ...... 4
Section III Overview of the Company’s Business ...... 9
Section IV. Business Discussion and Analysis .................................................................................................. 13
Section V. Important Events ............................................................................................................................ 37
Section VI. Changes in Shares and Particulars about Shareholders ................................................................ 59
Section VII. Particulars about Directors, Supervisors, Senior Executives and Employees .............................. 70
Section VIII. Corporate Governance ................................................................................................................ 81
Section IX. Financial Report .......................................................................................................................... 88
Section X. Documents Available for Reference .......................................................................................... 173
Paraphrase
| Items | Refers to | Contents |
| Company, the Company, CSG or the Group | Refers to | CSG Holding Co., Ltd. |
| Foresea Life | Refers to | Foresea Life Insurance Co., Ltd. |
| Ultra-thin electronic glass | Refers to | The electronic glass with thickness between 0.1~1.1mm |
| Second-generation energy-saving glass | Refers to | Double silver coated glass |
| Third-generation energy-saving glass | Refers to | Triple silver coated glass |
| AG glass | Refers to | Anti-glare glass |
| AF glass | Refers to | Anti-fingerprint galss |
Section II Company Profile & Financial Highlights
I. Company information
| Code for A-share | 000012 | Code for B-share | 200012 |
| Short form for A-share | Southern Glass A | Short form for B-share | Southern Glass B |
| Listing stock exchange | Shenzhen Stock Exchange | ||
| Legal Chinese name of the Company | 中国南玻集团股份有限公司 | ||
| Abbr. of legal Chinese name of the Company | 南玻集团 | ||
| Legal English name of the Company | CSG Holding Co., Ltd. | ||
| Abbr. of legal English name of the Company | CSG | ||
| Legal Representative | Chen Lin | ||
| Registered Add. | CSG Building, No.1, the 6th Industrial Road, Shekou, Shenzhen, P. R.C. | ||
| Post Code | 518067 | ||
| Office Add. | CSG Building, No.1, the 6th Industrial Road, Shekou, Shenzhen, P. R.C. | ||
| Post Code | 518067 | ||
| Internet website | www.csgholding.com | ||
| securities@csgholding.com | |||
II. Person/Way to contact
| Secretary of the Board | Representative of security affairs | |
| Name | Yang Xinyu | Chen Chunyan |
| Contacts add. | CSG Building, No.1 of the 6th Industrial Road, Shekou, Shenzhen, P. R.C. | CSG Building, No.1 of the 6th Industrial Road, Shekou, Shenzhen, P. R.C. |
| Tel. | (86)755-26860666 | (86)755-26860666 |
| Fax. | (86)755-26860685 | (86)755-26860685 |
| securities@csgholding.com | securities@csgholding.com |
III. Information disclosure and preparation place
| Newspapers for information disclosure | Securities Times, China Securities Journal, Shanghai Securities News, Securities Daily and Hong Kong Commercial Daily |
| Website assigned by CSRC to release the annual report | www.cninfo.com.cn |
| The place for preparation of the annual report | Office of the Board of Directors |
IV. Registration changes of the Company
| Organization code | Unified social credit code: 914403006188385775 |
| Changes of main business since listing (if applicable) | No changes |
| Previous changes for controlling shareholders (if applicable) | No changes |
V. Other relevant information
CPA firm engaged by the Company
| Name of CPA firm | Asia Pacific (Group) CPAs (special general partnership) |
| Offices add. for CPA firm | Room 301, building 1, No. 9, Che Gong Zhuang Street, Xicheng District, Beijing, China |
| Signing Accountants | Zhao Qingjun, Zhou Xianhong |
Sponsor institute engaged by the Company for performing continuous supervision duties in the report period□ Applicable √ Not applicableFinancial consultant engaged by the Company for performing continuous supervision duties in the report period□ Applicable √ Not applicable
VI. Main accounting data and financial indexes
Whether it has retroactive adjustment or re-statement on previous accounting data for accounting policy changed and accountingerror correction or not
□Yes √No
| 2018 | 2017 | Changes over last year | 2016 | |
| Operating income (RMB) | 10,609,963,011 | 10,879,400,746 | -2.48% | 8,974,083,407 |
| Net profit attributable to shareholders of the listed company (RMB)* note1 | 452,965,935 | 825,388,312 | -45.12% | 797,721,576 |
| Net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses (RMB) *note2 | 367,579,835 | 745,373,108 | -50.69% | 776,950,973 |
| Net cash flow arising from operating activities (RMB) | 2,130,378,100 | 2,463,446,156 | -13.52% | 2,240,852,120 |
| Basic earnings per share (RMB/Share) *note3 | 0.16 | 0.30 | -46.67% | 0.33 |
| Diluted earnings per share (RMB/Share) *note4 | 0.16 | 0.29 | -44.83% | 0.33 |
| Weighted average ROE (%) *note5 | 5.16% | 10.15% | -4.99% | 10.33% |
| As at 31 Dec. 2018 | As at 31 Dec. 2017 | Changes over the end of last year | As at 31 Dec. 2016 | |
| Total assets (RMB) | 19,114,234,184 | 19,535,002,368 | -2.15% | 17,146,815,630 |
| Net assets attributable to shareholders of the listed company (RMB) | 9,103,154,571 | 8,458,587,873 | 7.62% | 7,808,915,004 |
Influence of equity incentive expense:
Note (1): Data in aforesaid table has contained the equity incentive expense RMB 141.49 million yuan shared and included into lossand gain in 2018，and the effect on the net profit attributable to shareholder of listed company was RMB 124.63 million yuan.Excluding the effect of equity incentive expense share, the net profit attributable to shareholder of listed company in 2018 was RMB577.59 million yuan, a year-on-year decrease of RMB 247.8 million yuan, or 30.02%Note (2): Excluding the effect of equity incentive expense share, the net profit attributable to shareholders of the listed company afterdeducting non-recurring gains and losses in 2018 was RMB 492.21 million yuan, a year-on-year decrease of RMB 253.16 millionyuan, or 33.96%Note (3): Excluding the effect of equity incentive expense share, the basic earnings per share in 2018 was RMB 0.21yuan, declined30% year on year.Note (4): After excluding the effect of equity incentive expense share, the diluted earnings per share in 2018 was RMB 0.20 yuan,declined 31.03% year on year.Note (5): After excluding the effect of equity incentive expense share, the weighted average ROE 2018 was 6.58%, declined 3.57%year on year.
| The total share capital of the company as of the previous trading day of disclosure (share) | 2,863,277,201 |
| Fully diluted earnings per share calculated with latest equity (RMB/share) | 0.16 |
Whether there is corporate bonds
□Yes √No
Whether there is continuous loss in recent two years
□Yes √NoVII. Accounting Data Differences under Chinese Accounting Standards (CAS) andInternational Financial Reporting Standards (IFRS) and Foreign Accounting Standards1. Net Income and Equity Differences under CAS and IFRS
□ Applicable √ Not applicableNo such differences for the Report Period.
2. Net Income and Equity Differences under CAS and Foreign Accounting Standards
□ Applicable √ Not applicableNo such differences for the Report Period.
3. Reason of the difference between domestic and overseas accounting data
□ Applicable √ Not applicable
VIII. Main financial indexes by quarter
Unit: RMB
| Q1 | Q2 | Q3 | Q4 | |
| Operating income | 2,629,471,994 | 2,841,085,983 | 2,680,693,459 | 2,458,711,575 |
| Net profit attributable to shareholders of the listed company | 159,382,821 | 193,454,332 | 116,279,185 | -16,150,403 |
| Net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses | 152,948,714 | 180,489,383 | 86,201,062 | -52,059,324 |
| Net cash flow arising from operating activities | 60,223,706 | 704,340,382 | 646,261,934 | 719,552,078 |
Whether there are significant differences between the above-mentioned financial index or its total number and the relevant financialindex disclosed in the Company’s quarterly report and semi-annual report or not□Yes √ No
IX. Items and amounts of extraordinary gains/losses
√Applicable □ Not applicable
Unit: RMB
| Item | 2018 | 2017 | 2016 | Note |
| Gains/losses from the disposal of non-current asset (including the write-off that accrued for impairment of assets) | -454,368 | -1,768,993 | -1,759,358 | |
| Governmental subsidy reckoned into current gains/losses (not including the subsidy enjoyed in quota or ration according to national standards, which are closely relevant to enterprise’s business) | 94,835,539 | 87,875,417 | 91,627,439 | |
| Gains on disposal of available-for-sale financial assets, gains and losses from change of fair values of held-for-transaction financial assets and financial liabilities except for the effective hedge business related to normal business of the Company, and investment income from disposal of transactional financial assets and liabilities and financial assets available for sale | 427,636 | -9,850,256 | ||
| Loss and profit on external entrusted loan | 534,591 | |||
| Other non-operating income and expenditure except for the aforementioned items | 12,099,680 | 12,076,848 | 1,306,284 | |
| Other gains/losses satisfied definition of extraordinary profit (gains)/loss | -45,909,181 | |||
| Less: Impact on income tax | 16,483,870 | 16,209,135 | 14,327,585 | |
| Impact on minority shareholders’ equity (post-tax) | 5,145,472 | 2,386,569 | 316,740 | |
| Total | 85,386,100 | 80,015,204 | 20,770,603 |
Reason shall be provided for the non-recurring profit and loss items defined by the company according to the definition in the No. 1of Explanatory Announcement on Information Disclosure for Companies Offering their Securities to the Public: Non-recurring Profitand Loss and the listed non-recurring profit and loss items defined into recurring profit and loss items.□ Applicable √ Not applicable
Section III Overview of the Company’s Business
I. Main business of the Company in the report period
CSG is a leading domestic brand of energy-saving glass and a renowned brand of solar PV products and display devices. Its productsand technologies are very popular at home and abroad. Its main business covers R&D, manufacturing and sales of high quality floatglass and architectural glass, solar glass, silicon material, renewable energy products such as PV battery and modules, and newmaterials and information display products such as ultra-thin electronic glass and display devices. It also provides one-stop servicessuch as project development, construction, operation and maintenance of solar photovoltaic power plants.
Flat glass industry
CSG now has 10 float glass production lines representing the most advanced technology in domestic market and 2 solar glassproduction lines. The annual capacity of various high-grade float glass has reached more than 2.32 million tons and the annualcapacity of solar processed glass has reached over 0.43 million tons. The Company owns quartz sand raw material bases in Jiangyou,Sichuan Province and Qingyuan, Guangdong Province. The production bases for flat glass, solar glass of the Company located inDongguan, Chengdu, Langfang, Wujiang, and Xianning, which can produce various colors of high-grade float glass and ultra-clearfloat glass with thickness from 1.3mm to 25mm. Those products are widely used in high-grade buildings, decoration and furniture,mirror, automotive windshield, scanner, copier light trans missive plate, home appliance panel, display devices protection and solarenergy field, each performance indicator of which has reached domestic advanced level.The Company always adheres to innovation, transformation and upgrading, and further enhances the profitability of flat glassindustry by the implementation of differentiated competitive strategy. In 2018, after the Production Line II of the subsidiary HebeiCSG entered commercial operation, it greatly increased the proportion of CSG Group in the ultra-clear float glass market. After thesubsidiary Chengdu CSG’s Production Line I resumed production, the high-quality automotive glass is used as the main product tofurther expand the automotive glass substrate market. The expansion of high value-added markets such as ultra-clear and automotiveglass will further enhance the market competitiveness of CSG's flat glass.
Architectural glass industry
As the nation's largest supplier of high-grade engineering and architectural glass, CSG has five architectural and energy-saving glassprocessing centers which are located in Tianjin, Dongguan, Xianning, Wujiang and Chengdu. The Company possesses theinternational advanced glass deep-processing equipment and testing instruments, and its products cover all kinds of architecturalglass. R&D and use of coating technology of the Company keep pace with the world and its technology of high-end product is evenof the world’s top level. Following the second generation of energy-saving glass products, the Company has successively developedthe third generation and multi-function energy-saving glass products with continuous improving energy-saving and heat-preservationeffect. Its high-quality energy-saving LOW-E insulating glass has always led the domestic high-end building energy-saving glassmarket. At present, the Company’s LOW-E coated glass and LOW-E coated insulating glass have reached annual capacity of morethan 36.00 million square meters and 16.00 million square meters respectively.The Company’s quality management system for engineering and architectural glass has been respectively approved by organizationsof UK AOQC and Australia QAS. The product quality which meets the national standards of the US, the UK and Australia enablesCSG has an advantage in the international tendering and bidding. Since 1988, CSG's engineers and technicians have beencontinuously participating in the formulation and compilation of various national standards and industry standards. Varioushigh-quality architectural glass of the Company has been used in many landmark buildings at home and abroad, such as BeijingCapital International Airport, CCTV, China Resources Headquarters Building, Shenzhen KingKey100 Building, Shenzhen Shen NinePioneer Park, Shenzhen Trade Qianhai Center, Ping An International Finance Centre, Hangzhou International Airport, Hangzhou
Europe finance City, Shanghai Qiantan Iron Lion Gate Center, Chengdu Zhongjiao International Center, Changsha World TradeCenter, Hefei Evergrande Center, Beijing subsidiary administrative center, Beijing Daxing International Airport, Qingdao JiaodongInternational Airport, Chengdu International Finance Center, Hangzhou Hampton and other more than ten Hilton Hotels, Hong KongFour Seasons Hotel, Melbourne Airport, Midtown, International Centre of Abu Dhabi and Korea LCT.Furthermore, the new investment of Jade Glass project construction has been just completed, and will be transferred into operationshortly after. Meanwhile, the company tries to enhance the technology that will open the high level interior decoration glass marketfor CSG in future, which that will improved the comprehensive the advantage of competitive in architectural glass industry.
Solar Energy industry
CSG has entered solar photovoltaic industry since 2005 and is one of enterprises which firstly enter the field in China. After morethan ten years of construction, operation and technological upgrading, CSG has built an industry chain in the field, covering high-purity polycrystalline silicon materials, high-efficiency silicon wafer, silicon solar cell and modules, and the design and constructionof solar photovoltaic power plants, by which the Company ensures the stable quality and best cost-efficiency of its PV products tocustomers.The Company now produces 9,000 ton/year of high purity polycrystalline silicon, 2.2 GW/year of silicon wafer, 0.85GW/year ofsolar cell, and 0.4GW/year of modules. The quality and performance indicators of the Company's polysilicon have reached theadvanced level in the industry and it has reserved electronic-grade polysilicon production technology. Meanwhile, the Company isalso promoting silicon wafer project of Yichang CSG, technological innovation, expansion and reconstruction projects of solar cellmodule in Dongguan in order to enhance the anti-risk capacity of its PV industry chain and drive the balanced, stable development ofits PV industry chain. When the projects are completed, the quality and performance indicators of the Company's polysilicon, siliconwafers and silicon solar cells will be greatly increased cut down the manufacturing costs and the general competitiveness of the chainwill be further improved.To build the whole solar industry chain, the Company established Shenzhen CSG PV Energy Co., Ltd., a wholly-owned subsidiary, in2015, of which the mainline business is to invest and develop solar power plants and extend CSG's solar energy industry to coverhighly value-added terminal applications. The Company newly established New Energy Application Department to generally managethe investment, operation and maintenance of the Company's PV power plants and effectively integrate internal assets, so as toenlarge and strengthen its solar energy business.
Electronic glass and display industry
The company currently owns four electronic glass production bases, Hebei Shichuang, Yichang Photoelectric, Qingyuan CSG andXianning Photoelectric. When Xianning Photoelectric has done the trial in the end 2018, the company industrial scale of windowprotection electronic glass and the competitiveness has been improved. CSG electronic glass industry is divided into high andmedium aluminum, with 0.20-8.0mm products categorized into high aluminum glass series products and 0.20-1.1mm products intomedium aluminum glass series products respectively. The products are widely applied in mobile intelligent terminal display and bodyprotection, ITO conductive component, and extend to military security, new type vehicle display screen, special vehicle, smart homeappliance, etc. Through efficient product R&D and market development, CSG electronic glass are at the main of options of domesticand foreign famous consumer electronic brands for protective glass base material.In Dec. 2018, the approval works of phase II project of subsidiary Qingyuan CSG were completed and the construction wascommenced. In this project, unique one-kiln and two-line process is adopted to produce 0.33-1.1mm ultra-white and ultra-thinelectronic glass, 3-4mm or 15-22mm ultra-white special glass at the same time. The project will optimize product structure andcombination of the company in the field of electronic glass product, efficiently cutting down manufacturing costs and improved thecomprehensive competitiveness of the company in electronic glass industry.Since the establishment of Shenzhen CSG Display Technology Co., Ltd. in 2000, with nearly 20 years of experience, the company'smain products and core technologies cover three major businesses, namely vacuum magnetron sputtering coating, yellow lightpattern forming and TP module processing, forming two complete touch industrial chains. On electronic glass substrate with the
"coating to yellow light pattern glass forming, glass touch module processing" industrial chain, the main business products are: high,middle-grade ITO conductive glass, glass Sensor/G - TP prevent and reduce the reverse (AR), module, fingerprint (AF), and asemipermeable (RT), super-hard film (DLC) and so on glass substrate composite coating of differentiated products. Another industrychain of "substrate coating flexible yellow light pattern processing flexible touch module processing" is based on flexible optical film.The main products are: high and medium ITO conductive film, ITO copper film, thin film, film Sensor/ F-TP module, etc. Themanufacturing line of AG glass mainly for the market of vehicle central control has been established by the end of 2018 and willcommercialized in 2019, which will offer a new profit growth for CSG Electronic display device industry. In addition, since 2013,the company has been developing high-end AG glass substrate, and has been able to successfully produce high-qualitysodium-calcium AG glass and high-alumina AG glass in mass production. With years of development, the CSG glass display devicehas become a high-quality supplier of electronic application materials in the display touch-control industry, as well as a supplier oftouch-sensors and TP modules, which can provide customers with a full range of one-stop TP solutions.
II. Major changes in main assets
1. Details of major changes in main assets
| Main assets | Note of major changes |
| Equity assets | There was no significant change in equity in the report period. |
| Fixed assets | Some of subsidiaries fixed assets turned into construction in progress for technical innovation /renovation in the report period. |
| Intangible assets | There was no significant change in intangible assets in the report period. |
| Construction in progress | Some of subsidiaries fixed assets turned into construction in progress for technical innovation /renovation in the report period. |
| Short term Loans | The company has repaid part of the loan in the report period. |
| Long term Loans | The company issued new medium-term notes during the report period. |
2. Main overseas assets
□ Applicable √ Not applicable
III. Core Competitiveness Analysis
① The Company currently has built complete industrial chains in the involved industries, which has complementary advantage. Inglass industry, the Company has set up the industry chain as quartz sand → high quality float glass → architectural energy-savingglass. In the solar energy industry, the Company has finished the comprehensive construction of industry chain from high puritypolycrystalline silicon materials, silicon wafer processing to cell and its module, photovoltaic rolled glass, etc. and extended toterminal application of PV power plant. With the improvement of technology in the chains, the industrial advantages emerged.② The Company possesses a complete industry layout. At present, the Company has established large production bases in EastChina, West China, South China, North China and Central China, which enables the Company to be closer to the market and servethe market better.③ The Company has capability of technology innovation and product innovation. It owns independent intellectual property rights of
high-end float glass production process. The technology level of ultra-thin electronic glass is in the leading position in China. TheCompany also keeps its R&D and production of energy-saving glass in line with the world’s advanced level, and its technique andtechnology in the field of solar energy keep leading position in domestic market.④ The Company possesses high anti-risk capability. It has established an effective internal control system. Meanwhile, themanagement and control ability of account receivable and inventory stand in a high level within the industry. CSG’s newmanagement team has an international perspective and a more open management philosophy. It aims to achieve the transfer ofcapacity and continues to expand new business fields along with the national policies of the Belt and Road based on the intensivedevelopment of CSG's main business, making the Company be bigger and stronger, so as to be a comprehensive industrial group.
Section IV. Business Discussion and Analysis
I. Introduction
The past 2018 is a year of changing and turbulence. The global economic growth rate is slowing down and the growth momentum isweakening. The domestic economy is also facing multiple pressures: macroeconomic investment drives and scale-driven economicgrowth met bottlenecks. The transformation of economic restructuring and economic growth momentum is on the way. The pace ofde-leveraging and de-capacity is accelerating, energy costs, raw material costs, environmental safety and compliance costs, and laborcosts are constantly increasing with policy changes. International trade protectionism has risen, and Sino-US trade dispute results andimpact has not yet clear, the overall economic growth pattern has shifted to the path of “innovation-driven” and “high-qualitydevelopment”. Seeing in the medium and long term, under the “new normal”, the macro-economic growth has maintained a certaingrowth rate, and the national strategy to achieve a “soft landing” while completing economic restructuring has been clarified. Underthe strong decision-making leadership of the country, although the overall growth rate has slowed down slightly, the quality ofeconomic growth has improved significantly. Especially with the supply-side reform and the regulation of financial markets, China'seconomic development is moving forward toward a more stable, healthy and high-quality direction.In 2018, facing the complex and changing economic environment and increasingly fierce market competition, all the staff of the CSGGroup united as one, rising to the challenge, forged ahead, and calmly responded to the policy and market pressure faced by thephotovoltaic new industries, while promoting the development of traditional core industries and new technology industries. Throughthe promotion of innovative products, the adjustment of operating mode and the transformation of resource allocation methods, CSGstrives to resolve the problems in the Group's industrial structure, strengthens the competitive advantages of the energy-saving glassindustry, and consolidates the foundation and kinetic energy of the rapid and healthy development of growth business such aselectronic glass and display devices, actively achieves the overall breakthrough of the photovoltaic industry through technologicalinnovation and capacity upgrade. CSG strived to obtain operating results in a complicated environment.During the reporting period, although some income loss compare to last year happened due to the photovoltaic industry's polysiliconand wafer manufacturing pending production and taking initiative technology upgrades, the company still achieved operatingrevenue of over 10 billion yuan, reaching 10.61 billion yuan, a year-on-year reduction of 269 million yuan, or 2.48%. Although theglass business segment, electronic glass and display device business segment of the company performance profit increasedsignificantly compared with the previous year, but due to market factors such as photovoltaic policy changes, the overall performanceof the photovoltaic business sector fell sharply, dragging the company the overall profit level, the company achieved a net profit of472 million yuan, a year-on-year reduction of 356 million yuan or 43.01%, net profit attributable to shareholders of listed companieswas 453 million yuan, a year-on-year reduction of 372 million yuan, or 45.12%, excluding the impact of equity incentive feesallocation, the net profit attributable to shareholders of listed companies in 2018 was 578 million yuan, a year-on-year reduction of248 million yuan, or 30.02%.
(I) Glass industry
The glass business is the Group's traditional core business and profit support. In 2018, despite the slowdown in the growth of the realestate market and the adverse market conditions such as negative growth in the automotive industry. The glass business, which is theCSG'S core industry still, bucking the trend growth. In 2018, the glass industry achieved operating revenue of 7.454 billion yuan, anincrease of 402 million yuan or 5.7% year-on-year. The net profit was 802 million yuan, a year-on-year increase of 93 million yuan,or 13.17%. The performance of the energy-saving glass industry has once again made a breakthrough, benefiting from thetremendous management benefits that the company has made from hard work in management, operation, research and development,market and other aspects.
Flat glass: In 2018, the flat glass overall maintained a good market. The company vigorously promotes technological innovation andcontinuously promotes product differentiation. Through the full play of production capacity, continuous optimization of productstructure, and continuous improvement of production cost control and production efficiency management, the company achievedincrease in both revenue and profit although without significant increase in production capacity. Revenue grew up 5.45%year-on-year; net profit grew up 2.5% year-on-year. The market share and profit contribution of ultra-white, super-long, ultra-thick,ultra-thin and other differentiating advantageous products continued to rise.Architectural glass: CSG Group is a leading enterprise in the domestic architectural energy-saving glass industry. The architecturalglass business is the brand support of CSG, and has formed the quality, service and continuous R&D capabilities that match thebrand. In 2018, architectural glass faces the pressure of the big environment and withstands the test of the market. On the one hand, itstrengthens the brand maintenance work, leads the whole industry to purify the market, forms an industry atmosphere that respectingthe brand, respecting technology and quality, which firmly strengthened the CSG brand influence; on the other hand, throughrational optimization of sales strategies, strengthening industry synergies, and through continuous internal production optimizationand improvement, quality management, order management, promoting factory automation production process improvement andoptimizing cost reduction and efficiency, as well as energy saving, the business performance has been greatly improved, with arevenue increase of 2.53% year-on-year; a net profit increase of 55.38% year-on-year. The introduction of a new nationalurbanization strategy, and the confirmation of the national strategy of the integration of Beijing-Tianjin-Hebei, Greater Bay District,the integration of the Yangtze River Delta, will bring new market opportunities to the company's architectural glass business. Inaddition, in 2018, the company invested in the construction of Dongguan CSG JingYu New Materials Co., Ltd. to expand thecompany's new business growth point in the field of special decorative glass materials.
(II) Electronic glass and display industry
The electronic glass and display device business is the company's high-growth business segment. In 2018, it achieved revenue of 960million yuan, a year-on-year increase of 9.86%; net profit of 142 million yuan, a year-on-year increase of 140.26%. The company'selectronic glass keeps pace with the development trend of the industry, continuously increases R&D investment and technologyupdate, and its competitive ability and brand influence continues to improve. In 2018, its operating income and net profit bothreached record highs. The company's ultra-thin electronic glass products, especially the high-aluminum ultra-thin electronic glassproducts, have further increased their domestic market share. The domestically produced electronic glass products led by CSG willactively expand downstream applications to replace imported products through quality and technology benchmarking internationalbrands. CSG Electronic Glass has gradually grown into another Celebrity brand business card. In place with Xianning Photoelectricwill be transferred to commercial operation in 2019, and the construction of Qingyuan ultra-white special glass and ultra-thinelectronic glass “one kiln two lines” project will further raise the threshold of electronic glass business and enhance the company'scompetitive advantage in the field.The company's display device industry has long-term technology accumulation and complete industrial chain advantages. In 2018, itseized the opportunity of the automotive touch-control market, and the shipment volume and profitability of TP module and glassyellow light business increased significantly. The AG glass production line, which is mainly for the automotive central control panelmarket, was completed at the end of 2018 and will be transferred to commercial operation in 2019, which will provide a new profitgrowth point for CSG's display device industry.
(III) Solar Energy industry
Affected by the policy change, the whole solar industry experienced a decline in the operating performance in 2018. The profits of allsegments in the industrial chain were severely squeezed further by the expansion of new procuction capacity with new technology oflow-energy-priced regions. The trend of new production capacity, new technology replacing the old has been speeded up. CSG solarenergy industry, especially in the manufacturing base of upstream materials such as polysilicon production and ingots, due to therelatively high electricity price in the located area, and the prolonged process of introducing new wafer production technology, isseriously affected by the sudden shrinkage of the downstream market. Facing such difficulties, the company has decided to lead the
industry to breakthrough the difficulties by developing the capacity upgrade project of the “large-scale chip applied electronic gradepolysilicon”. At the same time, the company will continuously improve its sustainable operational capability through improvingproduction efficiency, reducing costs, and improving the industry’s competitiveness.In 2018, the installed capacity of the company's photovoltaic power plants reached 132 MW, with the annual cumulative powergeneration of 131.54 million KWH, an increase of 25.99 million KWH year-on-year. The operation of the company's photovoltaicpower station is stable. Affected by the changes in the solar industry, especially in the material production end market environment,the solar industry achieved a total operating income of 2.342 billion yuan in 2018, a decrease of 784 million yuan or 25.08%compared with the same period of last year; net profit reached -237 million yuan, a decrease of 432 million yuan year-on-year, a dropof 222%.
II. Main business analysis
1. Overview
Unit: RMB
| Items | 2018 | 2017 | Range of Change | Analysis of reasons |
| Operating income | 10,609,963,011 | 10,879,400,746 | -2.48% |
| Operating costs | 8,120,481,894 | 8,216,358,372 | -1.17% | |
| Sales expenses | 354,983,459 | 336,131,723 | 5.61% | Mainly due to the increase in transportation costs and employee compensation |
| Administration expenses | 731,215,251 | 588,652,397 | 24.22% | Mainly due to the amortization of expenses in equity incentives |
| R&D expenses | 338,791,891 | 330,677,375 | 2.45% | |
| Financial expenses | 349,403,487 | 315,961,080 | 10.58% | Mainly due to the increase in interest expenses |
| Net cash flow arising from operating activities | 2,130,378,100 | 2,463,446,156 | -13.52% | Mainly due to the decrease in cash received from sales of goods and provision of labor services. |
| Net cash flow arising from investment activities | -778,807,979 | -1,220,130,334 | -36.17% | Mainly due to the decrease in cash paid for purchasing fix asset, intangible assets and other long term assets. |
| Net cash flow arising from financing activities | -1,588,458,276 | 634,295,928 | -350.43% | Mainly due to in previous term fund received through financing lease which is no longer carrying out in this reporting period. |
2. Revenue and cost
(1) Constitution of operation revenue
Unit: RMB
| 2018 | 2017 | Increase/decrease y-o-y | |||
| Amount | Ratio in operation revenue | Amount | Ratio in operation revenue | ||
| total of operating income | 10,609,963,011 | 100% | 10,879,400,746 | 100% | -2.48% |
| According to industry | |||||
| Glass industry | 7,453,555,124 | 70.25% | 7,051,910,295 | 64.82% | 5.70% |
| Solar energy industry | 2,341,776,474 | 22.07% | 3,125,611,234 | 28.73% | -25.08% |
| Electronic glass & Display industry | 960,075,428 | 9.05% | 873,868,480 | 8.03% | 9.86% |
| Others | 58,900,937 | 0.56% | 58,687,566 | 0.54% | 0.36% |
| Amount of unutilized | -204,344,952 | -1.93% | -230,676,829 | -2.12% | -11.42% |
| According to product | |||||
| Glass products | 7,453,555,124 | 70.25% | 7,051,910,295 | 64.82% | 5.70% |
| Solar energy products | 2,341,776,474 | 22.07% | 3,125,611,234 | 28.73% | -25.08% |
| Electronic glass & Display products | 960,075,428 | 9.05% | 873,868,480 | 8.03% | 9.86% |
| Others | 58,900,937 | 0.56% | 58,687,566 | 0.54% | 0.36% |
| Amount of unutilized | -204,344,952 | -1.93% | -230,676,829 | -2.12% | -11.42% |
| According to region | |||||
| Mainland China | 9,151,411,893 | 86.25% | 9,506,249,433 | 87.38% | -3.73% |
| H.K. China | 196,186,618 | 1.85% | 434,551,436 | 3.99% | -54.85% |
| Europe | 53,541,882 | 0.51% | 26,534,686 | 0.24% | 101.78% |
| Asia (excluding Mainland China and H.K.) | 1,125,389,041 | 10.61% | 848,958,711 | 7.80% | 32.56% |
| Australia | 39,605,066 | 0.37% | 37,937,222 | 0.35% | 4.40% |
| North America | 31,189,420 | 0.29% | 6,030,936 | 0.06% | 417.16% |
| Other regions | 12,639,091 | 0.12% | 19,138,322 | 0.18% | -33.96% |
(2) List of the industries, products or regions exceed 10% of the operating income or operating profits ofthe Company
√Applicable □ Not applicable
Unit: RMB
| Operating revenue | Operating cost | Gross profit ratio | Increase/decrease of operating revenue y-o-y | Increase/decrease of operating cost y-o-y | Increase/decrease of gross profit ratio y-o-y | |
| According to industry | ||||||
| Glass industry | 7,453,555,124 | 5,400,796,739 | 27.54% | 5.70% | 3.50% | 1.53% |
| Solar energy industry | 2,341,776,474 | 2,196,725,216 | 6.19% | -25.08% | -12.60% | -13.39% |
| Electronic glass and display device industry | 960,075,428 | 667,840,703 | 30.44% | 9.86% | 2.43% | 5.05% |
| According to product | ||||||
| Glass products | 7,453,555,124 | 5,400,796,739 | 27.54% | 5.70% | 3.50% | 1.53% |
| Solar energy products | 2,341,776,474 | 2,196,725,216 | 6.19% | -25.08% | -12.60% | -13.39% |
| Electronic glass & Display device products | 960,075,428 | 667,840,703 | 30.44% | 9.86% | 2.43% | 5.05% |
| According to region | ||||||
| Mainland China | 9,151,411,893 | 6,959,210,746 | 23.95% | -3.73% | -2.61% | -0.88% |
| Asia (other than Mainland China and Hongkong) | 1,125,389,041 | 934,918,533 | 16.92% | 32.56% | 34.41% | -1.15% |
Under the circumstances that the statistical standards for the Company’s main business data adjusted in the report period, theCompany's main business data in the recent year is calculated based on adjusted statistical standards at the end of the report period□ Applicable √ Not applicable
(3) Whether the Company’s goods selling revenue higher than the service revenue
Whether the Company’s goods selling revenue higher than the service revenue√Yes □ No
| Industry | Item | Unit | 2018 | 2017 | Increase/decrease y-o-y (%) |
| Flat glass | Sales volume | 10,000-ton | 274 | 264 | 3.79% |
| Output | 10,000-ton | 272 | 270 | 0.74% | |
| Inventory | 10,000-ton | 6 | 9 | -33.33% | |
| Architectural glass | Sales volume | 10,000-M2 | 2,471 | 3,027 | -18.37% |
| Output | 10,000-M2 | 2,500 | 3,045 | -17.90% | |
| Inventory | 10,000-M2 | 72 | 49 | 46.94% | |
| Electronic glass | Sales volume | ton | 39,931 | 34,315 | 16.37% |
| Output | ton | 43,275 | 32,073 | 34.93% | |
| Inventory | ton | 5,742 | 2,212 | 159.58% | |
| Polysilicon | Sales volume | ton | 4,753 | 2,434 | 95.28% |
| Output | ton | 7,692 | 8,101 | -5.05% | |
| Inventory | ton | 38 | 122 | -68.85% | |
| Silicon wafer | Sales volume | 10,000-piece | 26,346 | 34,779 | -24.25% |
| Output | 10,000-piece | 25,715 | 34,840 | -26.19% | |
| Inventory | 10,000-piece | 421 | 156 | 169.87% | |
| Solar cell | Sales volume | MW | 836 | 540 | 54.81% |
| Output | MW | 917 | 733 | 25.10% | |
| Inventory | MW | 19 | 15 | 26.67% |
Reasons for y-o-y relevant data with over 30% changes√Applicable □ Not applicable1. Flat glass: The decrease of inventory is mainly caused by reasonable control of delivery pace and appropriate reduction ofinventory level.2. Architectural glass: Although, because of the sales strategy adjustment and the products composition optimization, sales volumeand output in architectural glass slightly decreases, the profit level of architectural glass significantly improved. Meanwhile, in orderto fit with the adjustment of the sales strategy, inventory reserve is reasonably increased.3. Electronic glass: The production and inventory increase is mainly due to production capacity increased after the completion oftechnical renovation of some subsidiaries taken in the second half of 2017.4. Polysilicon: The increase in sales volume is mainly due to the increase of the external sales volume of polysilicon, which is causedby the technological renovation in part of silicon wafers production in this year. The decrease of inventory is mainly due to theproduction capacity of polysilicon cut down caused by the technological renovation in polysilicon production.5. Silicon wafer: The decrease in sales volume and output is mainly due to the technological renovation in part of silicon wafersproduction in this year. The increase in inventory is mainly due to the sudden reduction in system installment in downstream industrycaused by new government policy issued on solar industry in 31
st
May.6. Solar cell: The increase in sales volume is mainly due to the increase in production capacity.
(4) Fulfillment of significant sales contracts signed by the Company up to the report period
□ Applicable √ Not applicable
(5) Constitution of operation cost
Constitution of operation cost of main businessIndustry classification
Unit: RMB
| Industry | Item | 2018 | 2017 | Increase/decrease y-o-y | ||
| Amount | Ratio in operation cost | Amount | Ratio in operation cost | |||
| Glass industry | Raw material | 4,250,705,139 | 79.08% | 3,950,753,501 | 76.28% | 7.59% |
| Labor wages | 506,600,563 | 9.42% | 483,035,118 | 9.33% | 4.88% | |
| Manufacturing costs | 618,127,419 | 11.50% | 745,385,164 | 14.39% | -17.07% | |
| Electronic glass & Display industry | Raw material | 437,942,818 | 65.75% | 407,632,245 | 62.46% | 7.44% |
| Labor wages | 86,736,184 | 13.02% | 76,167,671 | 11.67% | 13.88% | |
| Manufacturing costs | 141,429,615 | 21.23% | 168,846,577 | 25.87% | -16.24% | |
| Solar energy industry | Raw material | 1,758,180,912 | 80.99% | 2,045,079,539 | 82.01% | -14.03% |
| Labor wages | 164,144,458 | 7.56% | 193,384,939 | 7.75% | -15.12% | |
| Manufacturing costs | 248,666,105 | 11.45% | 255,426,988 | 10.24% | -2.65% | |
Product classification
Unit: RMB
| Product | Item | 2018 | 2017 | Increase/decrease y-o-y | ||
| Amount | Ratio in operation cost | Amount | Ratio in operation cost | |||
| Glass products | Raw material | 4,250,705,139 | 79.08% | 3,950,753,501 | 76.28% | 7.59% |
| Labor wages | 506,600,563 | 9.42% | 483,035,118 | 9.33% | 4.88% | |
| Manufacturing costs | 618,127,419 | 11.50% | 745,385,164 | 14.39% | -17.07% | |
| Electronic glass & Display products | Raw material | 437,942,818 | 65.75% | 407,632,245 | 62.46% | 7.44% |
| Labor wages | 86,736,184 | 13.02% | 76,167,671 | 11.67% | 13.88% | |
| Manufacturing costs | 141,429,615 | 21.23% | 168,846,577 | 25.87% | -16.24% | |
| Solar energy | Raw material | 1,758,180,912 | 80.99% | 2,045,079,539 | 82.01% | -14.03% |
| products | Labor wages | 164,144,458 | 7.56% | 193,384,939 | 7.75% | -15.12% |
| Manufacturing costs | 248,666,105 | 11.45% | 255,426,988 | 10.24% | -2.65% |
(6) Whether the consolidated scope changed during the report period
√ Yes □NoOn February 11, 2018, the group established Qingyuan CSG quartz material co., Ltd. As of December 31, 2018, the group has made amonetary capital contribution of 6 million yuan, and the group holds 100% of its shares.On March 30, 2018, the group established Dongguan CSG Jingyu new material co., Ltd. As of December 31, 2018, the group hasmade a monetary capital contribution of 24 million yuan, and the group holds 80% of its shares.On May 22, 2018, the group set up Changshu CSG new energy co., Ltd. As of December 31, 2018, the group has not invested, andthe group holds 100% of its shares.
(7) Major changes or adjustment in business, product or service of the Company in the report period
□ Applicable √ Not applicable
(8) Major customers and major suppliers
Major customers of the Company
| Total sales to the top five customers (RMB) | 863,669,956 |
| Proportion in total annual sales volume for top five customers | 8.14% |
Information of the top five customers of the Company
| Serial | Name of customer | Sales volume (RMB) | Proportion in total annual sales |
| 1 | Customer A | 274,833,538 | 2.59% |
| 2 | Customer B | 259,752,265 | 2.45% |
| 3 | Customer C | 118,336,100 | 1.12% |
| 4 | Customer D | 108,440,154 | 1.02% |
| 5 | Customer E | 102,307,899 | 0.96% |
| Total | 863,669,956 | 8.14% |
Other statement of main customers□ Applicable √ Not applicable
Major suppliers of the Company
| Total purchase amount from the top five suppliers (RMB) | 1,493,214,098 |
| Proportion in total annual purchase amount from the top five suppliers | 18.06% |
Information of the top five suppliers of the Company
| Serial | Name of supplier | Purchase amount (RMB) | Proportion in total annual purchase |
| 1 | Supplier A | 463,537,163 | 5.61% |
| 2 | Supplier B | 368,331,899 | 4.46% |
| 3 | Supplier C | 255,739,892 | 3.09% |
| 4 | Supplier D | 226,760,639 | 2.74% |
| 5 | Supplier E | 178,844,505 | 2.16% |
| Total | 1,493,214,098 | 18.06% |
Other statement of main suppliers□ Applicable √ Not applicable
3. Expenses
Unit: RMB
| 2018 | 2017 | Increase/decrease y-o-y | Note of major changes | |
| Sales expense | 354,983,459 | 336,131,723 | 5.61% | |
| Management expense | 731,215,251 | 588,652,397 | 24.22% | Mainly due to the amortization of expenses in equity incentives |
| Financial expense | 349,403,487 | 315,961,080 | 10.58% | Mainly due to the increasing of interest costs. |
| R&D expenses | 338,791,891 | 330,677,375 | 2.45% |
4. R&D expenses
√Applicable □ Not applicableThe Company always emphasizes R&D of new products, new technology and new craft, and R&D aims to stay close to the market,production and industry.
R&D investment of the Company
| 2018 | 2017 | Ratio of change | |
| Number of R & D personnel (person) | 146 | 134 | 8.96% |
| Ratio of number of R&D personnel | 1.35% | 1.11% | 0.24% |
| Amount of R & D investment (RMB) | 381,711,070 | 368,237,629 | 3.66% |
| Ratio of the R&D investment to the operating income | 3.60% | 3.38% | 0.22% |
| Amount of the capitalized R&D investment (RMB) | 29,735,459 | 43,122,431 | -31.04% |
| Ratio of the capitalized R&D investment to the R&D investment | 7.79% | 11.71% | -3.92% |
Reason of remarkable changes over the last year of the ratio of the total R&D investment amount to the operating income
□ Applicable √ Not applicableReason of substantial change of the ratio of the R&D investment capitalization and its reasonable explanation□ Applicable √ Not applicable
5. Cash flow
Unit: RMB
| Item | 2018 | 2017 | Increase/decrease y-o-y |
| Subtotal of cash in-flow from operation activity | 12,086,856,666 | 12,256,615,740 | -1.39% |
| Subtotal of cash out-flow from operation activity | 9,956,478,566 | 9,793,169,584 | 1.67% |
| Net cash flow from operation activity | 2,130,378,100 | 2,463,446,156 | -13.52% |
| Subtotal of cash in-flow from investment activity (i) | 35,327,557 | 192,127,040 | -81.61% |
| Subtotal of cash out-flow from investment activity (ii) | 814,135,536 | 1,412,257,374 | -42.35% |
| Net cash flow from investment activity (iii) | -778,807,979 | -1,220,130,334 | -36.17% |
| Subtotal of cash in-flow from financing activity (iv) | 4,672,680,876 | 8,129,917,929 | -42.52% |
| Subtotal of cash out-flow from financing activity | 6,261,139,152 | 7,495,622,001 | -16.47% |
| Net cash flow from financing activity (v) | -1,588,458,276 | 634,295,928 | -350.43% |
| Net increased amount of cash and cash equivalent (vi) | -234,626,252 | 1,875,186,175 | -112.51% |
Relevant data year-on-year major changes in the main influencing factors√Applicable □ Not applicable(i) It is mainly caused by the decrease of cash received in connection with other investment activities.(ii) It is mainly caused by the decrease of cash paid for purchasing/constructing fixed assets, intangible assets and other long-termassets.(iii) It is mainly caused by the decrease of cash paid for purchasing/constructing fixed assets, intangible assets and other long-termassets.(iv) It is mainly due to the decrease in cash received in connection with leverage lease and interest free loans.(v) Mainly due to in previous term fund received through financing lease which is no longer carrying out in this reporting period.(vi) It is mainly caused by the decrease of cash inflow of financing activities.
Notes to the reason of the significant differences between the net cash flow from the operating activities and the net profits of theyear during the report period√Applicable □ Not applicableAdjustment for the difference between net profit and amount of cash flow from operation activity for the year as follows:
Unit: RMB
| Net profit | 472,208,588 |
| Plus: impairment of assets | 136,546,150 |
| Depreciation of fixed assets | 965,935,450 |
| Amortization of intangible assets | 50,567,703 |
| Net change in safe production costs | 2,843,662 |
| Amortization of long-term deferred expenses | 1,647,906 |
| Share-based pay for employees | 141,486,074 |
| Net loss/ (gains) on disposal of fixed assets and intangible assets | 454,368 |
| Financial expenses | 401,627,067 |
| Deferred income tax assets increase | -58,656,656 |
| Increase in deferred income tax liabilities | 1,202,886 |
| Decrease in inventories | 85,267,118 |
| Increase in operating receivables | -63,345,244 |
| Decrease in operating payables | -7,406,972 |
| Net cash flow from operating activities | 2,130,378,100 |
III. Analysis of the non-core business
√Applicable □ Not applicable
Unit: RMB
| Amount | Ratio in total profit | Note for the reason | Sustainable or not | |
| Asset impairment | 136,546,150 | 25.07% | Mainly due to decrease in value of long term assets and goodwill | No |
| Non-operating income | 13,858,651 | 2.54% | Mainly due to the penalty of the contracts and the un-payable accounts | No |
| Non-operating expense | 1,541,471 | 0.28% | Mainly due to the appraisals of the deviation electric quantity | No |
| Other Income | 94,618,039 | 17.37% | Mainly due to government subsidy | No |
IV. Assets and liabilities
1. Major changes of assets and liabilities composition
Unit: RMB
| As at 31 Dec. 2018 | As at 31 Dec. 2017 | Change of proportion | Notes of major changes | |||
| Amount | Proportion in total assets | Amount | Proportion in total assets | |||
| Monetary funds | 2,226,447,720 | 11.65% | 2,462,605,764 | 12.61% | -0.96% | |
| Accounts receivable | 592,233,312 | 3.10% | 638,238,290 | 3.27% | -0.17% | |
| Advance payment | 91,176,675 | 0.48% | 143,848,023 | 0.74% | -0.26% | Mainly due to the decrease in prepayment for materials |
| Inventory | 600,139,750 | 3.14% | 685,895,317 | 3.51% | -0.37% | |
| Other Current Assets | 445,327,449 | 2.33% | 200,847,989 | 1.03% | 1.30% | Mainly due to new entrusted loans in the current period |
| Fix assets | 9,930,843,775 | 51.96% | 11,540,769,697 | 59.08% | -7.12% | Mainly due to some subsidiaries transferred the fixed assets to technical projects under construction |
| Construction in process | 2,559,179,442 | 13.39% | 1,417,624,618 | 7.26% | 6.13% | Mainly due to some subsidiaries transferred the fixed assets to technical projects under construction |
| Long-term deferred expenses | 12,746,609 | 0.07% | 2,223,397 | 0.01% | 0.06% | Mainly due to amortization of land lease payments |
| Deferred income tax assets | 139,529,518 | 0.73% | 80,872,862 | 0.41% | 0.32% | Mainly due to the increase in share payment and tax losses |
| Short-term loans | 2,922,679,590 | 15.29% | 3,704,630,909 | 18.96% | -3.67% | Mainly due to repayment of part of the loan |
| Long-term loans | 2,315,700,000 | 12.12% | 1,554,120,000 | 7.96% | 4.16% | Mainly due to the new issuance of medium-term notes |
| Long term Accounts payable | 529,910,796 | 2.77% | 1,161,794,247 | 5.95% | -3.18% | Mainly due to the repayment of leverage leases in the current period |
| Other Comprehensive Income | 5,080,234 | 0.03% | 1,948,943 | 0.01% | 0.02% | Mainly due to changes in foreign currency statement translation differences |
| Special Reserve | 6,068,600 | 0.03% | 3,224,938 | 0.02% | 0.01% | Mainly due to increased investment in safety production |
| Treasury stock | 277,180,983 | 1.45% | 417,349,879 | 2.14% | -0.69% | Mainly due to the first phase of the restricted equity incentive stock unlocked |
2. Assets and liabilities measured at fair value
□ Applicable √ Not applicable
3. Limited asset rights as of the end of the report period
| Item | Limited amount | Limited reason |
| Monetary funds | 1,320,807 | Limited margin transfer |
| Fix assets | 2,381,348,551 | Limited of Leveraged lease and Mortgage loan |
| Total | 2,382,669,358 |
V. Investment
1. Overall situation
√Applicable □ Not applicable
| Investment in the report period (RMB) | Investment in the same period of last year ( RMB) | Changes |
| 814,135,536 | 1,412,257,374 | -42.35% |
Reasons for large fluctuation：Mainly due to the decrease in cash paid for the purchase and construction of fixed assets, intangibleassets and other long-term assets.
2. The major equity investment obtained in the report period
□ Applicable √ Not applicable
3. The major ongoing non-equity investment in the report period
√Applicable □ Not applicable
Unit: RMB 0,000
| Project | Way of investment | Fixed asset investment or not | Industry involved | Amount invested in the report period | Accumulative amount actually invested by the end of the report period | Source of funds | Progress of project (ongoing projects) | Expected return | Accumulative revenue achieved by the end of the report period | Reasons for not achieving the planned progress and the expected return | Date of disclosure (if applicable) | Index of disclosure (if applicable) |
| PV power plant investment | Self-built | Yes | Manufacturing industry | 1,306 | 26,214 | Own funds and loans from financial institutions | CSG plans to construct PV power plants within two years from 2016 to 2017. Its wholly-owned subsidiary, Shenzhen CSG PV Energy Co., Ltd. will self-build 200MW and the remaining 140MW will be constructed by CSG with Qibin Group. During 2016 to 2018, Shenzhen CSG PV developed and built a total of 78MW of photovoltaic power stations, including 58MW of distributed photovoltaic power plants and 20MW of centralized photovoltaic power plants. | 4,344 | 2,399 | Part of the project has been completed. | January 22, 2016 | Notice number: 2016-006 |
| 4 million ㎡ light guide | Self-built | Yes | Manufacturing | 9,318 | 60,776 | Own funds and loans from | The Company plans to construct a 4 million square meters PV glass | 10,543 | The project was transferred to | May 21, 2016 | Notice number: |
| plate and PV glass production line | industry | financial institutions | production line for new type ultra-thin LCD display. The line is also provided with a capacity of higher strength ultra-thin electronic glass than CSG Qingyuan. The equity of Xianning Feng Wei Technology Co., Ltd. has been acquired at 2016 and the project has been done at December. | commercial operation in January 2019. | 2016-025 | |||||||
| Cold repair upgrading of the first line (600T) of Hebei CSG | Self-built | Yes | Manufacturing industry | 12,405 | 12,405 | Own funds and loans from financial institutions | The former 600T line of float glass of Hebei CSG was upgraded to produce 2mm~19mm glass. The project was started on September 26, 2018 and was completed in December 2018. | 3,887 | The project was transferred to commercial operation in January 2019. | April 9, 2018 | Notice number: 2018-012 | |
| Yichang CSG Polysilicon wafer capacity technology upgrade project | Self-built | Yes | Manufacturing industry | 595 | 595 | Own funds and loans from financial institutions | It is planned to fully implement the diamond wire cutting technology in the production of silicon wafers, introduce the casting single crystal technology and the wet black silicon technology, and upgrade the production capacity of the 1.3 GW polysilicon wafers in the early stage of the company to form an annual output of about 1.2 GW of cast single wafer. And annual production capacity of about 0.8GW wet black silicon wafer. | 12,599 | No gains as the project is in the construction period | July 28, 2018 | Notice number： 2018-040 | |
| Qingyuan | Self-built | Yes | Manufac | 34 | 34 | Own funds and | The company plans to adopt an | 16,420 | No gains as the | December | Notice |
| CSG Ultra-clean electronic glass and ultra-white special glass production line construction project | turing industry | loans from financial institutions | advanced design concept of one kiln and two lines to build a kiln two-line (80+620T/D) ultra-white electronic and ultra-white special glass production line with a daily melting capacity of 700 tons in Qingyuan CSG. The first line plan is 80T/ D design, will produce 0.33-1.1mm, and consider 2mm production capacity, mainly produces electronic display tempered protective glass for mobile phones. The second-line plan is designed according to 620T/D, with two series of 3-4mm and 15-22mm, 5-12mm as the transition, mainly producing AG anti-glare, "exposure glass" for scanning and copying machine, TCO and battery for thin film battery. Ultra-white special glass such as front plate and back plate. | project is in the construction period | 22, 2018 | number：2018-072 | ||||||
| Yichang CSG to add a 1GW silicon wafer project | Self-built | Yes | Manufacturing industry | 951 | 46,625 | Own funds and loans from financial institutions | CSG has added 1GW capacity of high-efficient polysilicon wafer to achieve 2.2GW capacity of polysilicon wafer. Construction of the first 500 MW capacity of polysilicon wafer was completed in September 2017. The company has decided to stop the implementation of the other 500MW capacity project. For details, | 14,853 | Project revenue cannot be accounted for separately. The company has decided to stop the implementation of the post-500MW capacity project. For details, please refer to the | January 06, 2016, April 16, 2016, July 28, 2018 | Notice number: 2016-001、2016-018、2018-040 |
| please refer to the announcement of the resolution of the extraordinary meeting of the 8th Board of Directors in 2018. | announcement of the resolution of the extraordinary meeting of the 8th Board of Directors in 2018. | |||||||||||
| Hebei Panel Glass project of medium-alumina ultra-thin electronic glass | Self-built | Yes | Manufacturing industry | 1,266 | Own funds | Plan to establish a production line for medium-alumina ultra-thin electronic glass in Hebei Panel Glass, using clean natural gas as the fuel, and produce 0.33mm～1.1mm medium-alumina ultra-thin glass with float process. The project was still in preparation. | The project has no income at present | October 29, 2014 | Notice number: 2014-030 | |||
| Yichang CSG 700MW crystalline silicon solar cell project | Self-built | Yes | Manufacturing industry | Plan to build a crystalline silicon solar cell production line with annual capacity of 700MW. The project was suspended and further investment will be based on actual industry situations. | The project was suspended. | December 25, 2010 | Notice number: 2010-046 | |||||
| Expanding 500MW solar module project in Dongguan | Self-built | Yes | Manufacturing industry | Plan to expand the solar module production line with annual capacity of 500MW. The project was suspended and further investment will be based on actual industry situations. | The project was suspended. | January 19, 2011 | Notice number: 2011-00 3 | |||||
| Relocation and equipment upgrading of the solar module | Self-built | Yes | Manufacturing industry | The Company plans to construct a module workshop in Xianning, Hubei Province, of which the final capacity will be 500MW. By relocation of some of the module equipment of its | The project was suspended. | April 16, 2016 | Notice number: 2016-018 |
| production line in Dongguan | subsidiary, Dongguan CSG PV Technology Co., Ltd. and purchase of some new equipment, the first stage capacity of the Xianning workshop will be 300MW and, afterwards, it will be expanded to 500MW as required upon the market conditions. | |||||||||||
| Solar online self-cleaning coated glass project of Dongguan CSG | Self-built | Yes | Manufacturing industry | The Company plans to construct an online self-cleaning coated glass line in Dongguan. | The project was suspended. | April 16, 2016 | Notice number: 2016-018 | |||||
| Malaysia-invested architectural glass plant | Self-built | Yes | Manufacturing industry | The Company plans to construct an architectural glass plant in Negeri Sembilan, Malaysia. The Phase I capacity of the newly-built plant will be 1,200,000 square meters insulating glass and 1,000,000 square meters single coated glass. | The project was suspended. | April 16, 2016 | Notice number: 2016-018 | |||||
| Total | 24,609 | 147,915 | 62,646 | 2,399 |
4. Financial assets investment
(1) Securities investment
□ Applicable √ Not applicableThere was no securities investment during the report period.
(2) Derivative investment
□ Applicable √ Not applicableThere was no derivative investment during the report period.
5. Use of raised fund
□ Applicable √ Not applicableThere was no such case during the report period.
VI. Sales of major assets and equity
1. Sales of major assets
□ Applicable √ Not applicable
2. Sales of major equity
□ Applicable √ Not applicable
VII. Analysis of main holding companies and joint -stock companies
√Applicable □ Not applicableParticular about main subsidiaries and joint -stock companies which have influence on the Company's net profit by over 10%
Unit: RMB
| Name of company | Type | Main business | Registered capital | Total assets | Net Assets | Operating revenue | Operating profit | Net profit |
| Chengdu CSG Glass Co., Ltd. | Subsidiary | Development, manufacture and sales of various special glass | 260 million | 994,562,363 | 592,149,512 | 1,102,892,837 | 216,021,025 | 183,649,322 |
| Xianning CSG Glass Co., Ltd. | Subsidiary | Development and manufacture and sales of various special glass | 235 million | 824,479,862 | 465,476,562 | 776,293,550 | 112,165,322 | 103,106,758 |
| Hebei CSG Glass Co., Ltd. | Subsidiary | Manufacture and sales of various special glass | USD 48.06million | 956,061,521 | 481,558,217 | 636,903,408 | 84,180,369 | 73,133,864 |
| Wujiang CSG Glass Co., Ltd. | Subsidiary | Manufacture and sales of various special glass | 565.04 million | 1,656,890,538 | 911,692,573 | 1,570,122,631 | 171,004,045 | 151,077,690 |
| Dongguan CSG Architectural Glass Co., Ltd. | Subsidiary | Deep processing of glass | 240 million | 1,049,779,965 | 539,555,636 | 909,090,550 | 74,320,886 | 65,406,546 |
| Wujiang CSG East China Architectural Glass Co., Ltd. | Subsidiary | Deep processing of glass | 320 million | 724,443,891 | 471,000,692 | 627,082,830 | 35,318,141 | 32,781,305 |
| Qingyuan CSG New energy saving materials Co., Ltd. | Subsidiary | Manufacture and sales of Ultra-thin electronic glass | 300 million | 750,127,923 | 357,842,238 | 262,402,765 | 88,694,820 | 75,051,790 |
| Tianjin CSG Energy Conservation Glass Co., Ltd | Subsidiary | Development, producing and sales of energy-saving special glass | 336 million | 792,189,031 | 566,048,091 | 764,301,802 | 56,349,550 | 51,796,569 |
| Dongguan CSG Solar Glass Co., Ltd. | Subsidiary | Manufacture and sales of Solar-Energy Glass products | 480 million | 1,212,160,906 | 683,523,571 | 998,448,249 | 96,598,422 | 84,609,919 |
| Yichang CSG Polysilicon Co., Ltd. | Subsidiary | Manufacture and sales of high purity silicon material products | 1,467.98 million | 3,682,288,014 | 1,141,662,766 | 1,296,883,246 | -345,412,548 | -290,103,454 |
| Shenzhen Nanbo Display Technology Co., Ltd. | Subsidiary | Manufacture and sales of display device products | 143 million | 1,639,483,612 | 847,511,566 | 564,971,827 | 50,839,765 | 49,063,159 |
| CSG (Hongkong) Investment Co., Ltd. | Subsidiary | Investment and trading | HKD 1 million | 100,963,234 | 58,745,922 | 391,387,906 | 8,599,176 | 6,384,852 |
Particular about subsidiaries obtained or disposed in report period□ Applicable √ Not applicable
Description of the major holding company:
Among the company's major holding companies, the related subsidiaries of the glass business subsidiaries achieved steady growth in2018 and achieved constantly growth. The electronic glass and display device business segment closely follows the developmenttrend of the industry and enhance the R&D and technology updates, the profitability, competitiveness and brand influencecontinuously increased. The solar energy industry is facing the adjustment of government policies, and the operation has been underpressure. However, the company responds energetically and explores better, faster and more stable development of the solar energyindustry from the strategic layout of the industry's development trend.
VIII. Structured main bodies controlled by the Company
□ Applicable √ Not applicable
IX. Outlook of the Company’s future development
1. Tendency of development of the industries the Company involvedFlat glass industryIn 2018, under the policy of supply-side reform and other policies, the regulation and control of production capacity of the flat glassindustry was further strengthened. With the stricter enforcement of comprehensive standards such as environmental protection andenergy consumption, the elimination of backward production capacity was accelerated. At the end of 2018, some production linescompleted cold repair, and the total production capacity of the industry increased slightly compared with 2017. In 2019, the realestate control policy is expected to be appropriately loosened. Although the demand in the real estate sector has declined slightly butthe overall demand for glass is basically the same as that in 2018, with the increase in the degree of composite processing of deepprocessing glass and the expansion of the use of the field applied; As the de-capacity policy continues to be implemented, morestringent emission standards may be implemented, and the supply-demand relationship is expected to shift to tighter supply. Inaddition, the increase in environmental protection costs in the glass industry will push up the market price, and benefit the CSGGroup, which has always been environmentally friendly and has various environmental protection facilities.
Architectural glass industryWith the domestic economic development entering “New Normal", the growth rate of fixed asset investment has slowed downobviously, and the price of upstream float glass has risen all the way, resulting in the decline of the overall profitability of theengineering glass industry since 2017. However, in 2018, CSG further strengthened brand protection and marketing, restructuring theproduction framework and promotion trend, vigorously developing equipment automation and informationization, cutting down costsand increasing efficiency, and the performance of engineering glass recovered and achieved substantial growth in 2018.In the long run, Low-E energy-saving glass is the key of construction energy-saving whose permeability has been over 80% indeveloped countries but less than 15% in China so far. In recent years, Chinese government has expanded more efforts to promotegreen building. According to Action Plan of Promoting Production and Application of Green Building Material jointly issued byMinistry of Industry and Information Technology and Ministry of Housing and Urban-Rural Development, the ratio of green buildingmaterial applied will be significantly increased and its quality will be improved dramatically. The proportion of green buildingmaterial will take up 30% in new building, 50% in green building, 70% in pilot project, and 80% in renovating existing building.High-end energy saving glass as an important part in green building has a huge market demand and the prospects for its developmentare worth looking forward to. At the same time, the introduction of a new urbanization strategy, Beijing-Tianjin-Hebei integration,Greater Bay District, and the integration of the Yangtze River Delta was upgraded to a national strategy, which will bring newopportunities to the company’s engineering glass.
Solar energy industryChina's PV market ranks the first in the world for last six years, with component production ranking first in the world for last 12years. China has become the number one in the world of photovoltaic power production and application. By the end of 2018, China'sPV installed capacity exceeded 170 GW, which has exceeded the basic goal of “Energy Development “13th Five-Year Plan” as “110million KWH of solar power generation by 2020”. The scale of China's PV industry will continue to expand due to the country'spolicy guidance for promoting clean energy and the rapid growth of the PV market.According to the "13th Five-Year Plan for Solar Energy Development", by 2020, photovoltaic will have to achieve the connection togrid at an equal price on the electricity user-side. Therefore, technological innovation will become the main theme of thedevelopment of the photovoltaic industry in the future. The drive power of the development of the industry will be turned fromgovernment policy to the technology and the market. The influence of single market policy change to the development of the industrywill be weakened, but the competition on products will become more intense, and the reshuffle of the manufacturing chain will beintensified. The resources and advantages of the development of the industry will continue to flow to enterprises with strongtechnological innovation capabilities, “the stronger will be stronger”
Electronic glass and display industryAlthough the smartphone and touch screen industries have entered a stable period in the market, brand manufacturers and supplychain enterprises are rapidly diverging, and the “T pattern” is becoming more and more obvious. The concentration of orders tohigh-quality customers is a positive factor for upstream material manufacturers. With the intensification of market competition,domestic and foreign consumer electronics brand manufacturers have started the work of cost-cutting of key components, which willbring a promising market prospect to domestic electronic glass manufacturers represented by CSG.In addition, with the commercialization of 5G technology in the future, the Internet of Things will penetrate into every corner ofhuman activities. The concept of things interconnection will greatly promote the industry equipped with human-computer interactionequipment such as smart homes, smart cars and smart home appliances. Performance electronic glass is one of the importantcomponents of human-computer interaction equipment. In summary, ultra-thin electronics industry and ultra-thin electronic glassmanufacturers including CSG will face new market opportunities and rapid development opportunities.According to the display industry forecast given by the authoritative research institute Touch Display Research, the global touchdisplay industry revenue will continue to grow in the next decade, but the growth rate will gradually slow down. In this process,OLED display technology, as the most competitive display technology, will gradually occupy the dominant position in the market,especially flexible OLED technology, for its foldable character, becoming a revolutionary technology upgrade. The peripheralmaterial to flexible OLED is expected to occupy a larger market advantage in the future. In addition, in the field of automotiveelectronics, with the rapid development of new energy vehicles, as well as the development of technologies such as vehiclenetworking technology, and multi-screen, large-screen or curved surfaces technology integrated automotive touch-control displayproducts will become the standard layout for automobiles, which has a broad market prospect.
2. Company Development Strategy2019 is the 35th anniversary of the establishment of CSG Group. The company will firmly stick to the strategy of working hard tomake the glass industry, as our main business, bigger and stronger, and coordinate the development of electronic glass and displaydevice business, and make efforts to achieve breakthrough in the solar energy industry. On the basis of the high quality endogenousdevelopment, the company aims to realize leap-forward extension development by means of making full use of various resourcessuch as market and capital, and through domestic and international domestic and international mergers & acquisition.Taking ‘industrial optimization, technological innovation, structural readjustment, and systemized lean management’ as the mainpath, the Group's scientific development capability and level shall be continuously improved. By accelerating the development ofstrategic supporting industries; promoting the focusing cultivated of business to grow into a strategic support industry as soon as
possible; strengthening the work of industries and enterprises under operating pressure; strengthening party building work, buildingup a strong cadre team and workforce, the company tries its best to build up a solid base for the "Hundred years CSG “.CSG will focus on sharing China's economic development achievements, firmly grasp China's “Belt and Road” strategic opportunity,and actively promote and strengthen its main business through proactive mergers and acquisitions and overseas investment strategies,and continue to enhance the industry position of each business segment. CSG will be made into an internationally influentialmultinational group with full reach to upstream and downstream of the glass industry.
3. Business Plan of 2019①Improve functions of headquarters, realize general planning management, promote centralized purchase, lean management, exploitits potential and increase efficiency, and ensure the completion of operation construction objective of the Company in 2019;② Improve R&D capacity, build up R&D talent team, and maintain the technical innovation advantage of the Company in theindustry;③ Create open, equal, fair and initiative enterprise culture, and strengthen core cohesion of the Company;④ Strengthen talent management, establish remuneration incentive system related to the performance, improve company incentivemechanism, strengthen employee training, and introduce high-quality talents;⑤ Rationally plan asset-liability ratio level and ensure controllable financial risk;⑥ Vigorously conduct potential exploiting and efficiency increase activity, realize energy saving and consumption reduction, andstrengthen competitiveness of the Company;⑦ Improve information level of the Company, and create the world first-class information management platform.
4. Capital Requirements, Plan and SourcesIn 2019, the company's budget capital expenditure was about 950 million yuan, mainly for the construction of ultra-clean electronicglass and ultra-clean special glass production line, photovoltaic power station investment, PV cellar production line technologyupgrade, engineering glass workshop automation and production capacity expansion. The sources of funds are mainly self-ownedfunds, loans from financial institutions, and public issuance of corporate bonds.
5. Risks and CountermeasuresIn 2019, in the face of “New Normal” of domestic economic development and the task of building a“Hundred years CSG”, theCompany will face the following risks and challenges:
① In 2018, under the efforts of the Board of Directors and all employees, daily operation of the Company entered normal and stableoperation. However, the Company still faces the risk of insufficient reserves of senior talents for the long-term development of theCompany. To cope with aforesaid risks, the Company will take the following measures:
A. Construct new corporate culture of CSG as soon as possible, establish an kind of open, equal, fair and enterprising corporateculture, and reinforce internal core cohesion of employees;B. Establish remuneration incentive system which related to performance and improve employee incentive mechanism;C. Strengthen internal employee training, introduce external high-quality talent, and rapidly establish a high-quality talent team;D. Establish sustainable talent recruitment, cultivation, utilization, retaining, and development management system; create afuture-oriented human resource production, development, supply system that can support the future development of CSG.②The glass industry continue to face the pressure of downward demand and horizontal competition, the solar energy and PVindustry will face the risk of industrial integration and price fluctuation, display devices and electronic glass industry will encounterthe risk of accelerated technical upgrading and slow demand on electronic product. To cope with aforesaid risks, the Company will
take the following measures:
A. In the flat glass industry, the Company will accelerate the technical upgrading and reform of existing production line to realizedifferential operation, expand industrial scale and strengthen industrial competitiveness through industrial M&A;B. In architectural glass industry, the Company will strengthen the development of high-end market and overseas market, activelydevelop traditional residence market, and at the same time, maintain the industrial advantageous position of the Company throughmarket-oriented extension of industrial chain;C. In the solar photovoltaic industry, the company continues to improve the level of polysilicon production technology, enhancewafer technology and capacity, upgrade the cell PERC technology, and accelerate the layout of solar power plants.D. In electronic glass and display devices industry, the Company will strengthen research and development of new technology, newproduct, maintain its technical leading advantage in the industry, and further improve the product quality of ultra-thin electronic glass,so as to rapidly develop terminal market and improve industrial profitability.③ Since 2018, the market price of glass and solar energy PV industrial has fluctuated greatly. At the same time, the prices ofupstream raw materials have fluctuated, and the current rising labor costs have brought risks to the Company's operations.To cope with risk, the Company will take the following measures:
A. Vigorously exploit potential and increase efficiency, and effectively implement energy saving and consumption reduction;B. Focus on the market change, and lock the price of bulk commodity at proper time;C. Utilize bulk purchase advantage to reduce purchase cost;D. Improve automatic production level, raise labor productivity.④ Risk of fluctuation of foreign exchange rate: At present, nearly 13.84% of the sales revenue of the Company is from overseas, inthe future, the Company will further develop overseas business, and therefore, the fluctuation of exchange rate will bring certain riskto the operation of the Company. To cope with such risk, the Company will settle exchange in time and use safe and effective riskevading instrument and product to relatively lock exchange rate and reduce the risk caused by fluctuation of exchange rate.
X. Reception of research, communication and interview
1. Particulars about research, communication and interview in the report period
√Applicable □ Not applicable
| Reception time | Way | Type | Basic information index of investigation |
| 2018-1-16 | Field research | Institute | Details can be found in the Record Chart of the Investor Relation Activity disclosed on Juchao website (www.cninfo.com.cn) on 18 January 2018. |
| Reception times | 1 |
| Number of reception institutions | 15 |
| Number of reception person | - |
| Number of other reception | - |
| Disclosed, released or let out major undisclosed information | No |
Section V. Important Events
I. Profit distribution plan of common shares and capitalization of capital reserve plan of theCompany
Implementation or adjustment of profit distribution plan in the report period, cash dividend plan and converting capital reserve intoshare capital in particular√ Applicable □Not applicableThe profit distribution plan for 2017 was approved by Annual General Shareholders’ Meeting of 2017 held on 14 May 2018 whichdistributed distributing cash dividend of RMB 0.5 (tax included) for every 10 shares to all shareholders and transferred capitalreserve into capital with 1.5 shares for every 10 shares to all shareholders. Notice of the distribution was published on ChinaSecurities Journal, Securities Times, Shanghai Securities News and Hong Kong Commercial Daily on 20 June 2018, and the profithas been distributed.
| Special explanation on cash dividend policy | |
| Satisfy regulations of General Meeting or requirement of Article of Association (Yes/No) | Yes |
| Well-defined and clearly dividend standards and proportion (Yes/No) | Yes |
| Completed relevant decision-making process and mechanism (Yes/No) | Yes |
| Independent directors perform duties completely and play a proper role (Yes/No) | Yes |
| Minority shareholders have ample opportunities and their legitimate rights and interests are effectively protected (Yes/No) | Yes |
| Condition and procedures are compliance and transparent while the cash bonus policy adjusted or changed (Yes/No) | Yes |
Statement on profit distribution plan and capitalization of capital reserve plan of the Company in nearly three years (including thereport period)Statement on profit distribution plan and capitalization of capital reserve proposal of the Company in 2018: based on currently2,863,277,201 shares of the total share capital, distributing cash dividend of RMB 0.5 (tax included) for every 10 shares to allshareholders. Meanwhile the Company will transfer capital reserve into capital with 1 share for every 10 shares to all shareholdersbased on 2,863,277,201 shares of the total share capital.Statement on profit distribution plan and capitalization of capital reserve plan of the Company in 2017: based on 2,484,147,547shares of the total share capital while dividends will be distributed, distributing cash dividend of RMB 0.5 (tax included) for every 10shares to all shareholders. Meanwhile the Company will transfer capital reserve into capital with 1.5 shares for every 10 shares to allshareholders based on 2,484,147,547 shares of the total share capital.Statement on profit distribution plan and capitalization of capital reserve plan of the Company in 2016: based on 2,075,335,560shares of the total share capital while dividends will be distributed, distributing cash dividend of RMB 1.00 (tax included) for every10 shares to all shareholders. Meanwhile the Company will transfer capital reserve into capital with 1.5 shares for every 10 shares toall shareholders based on 2,075,335,560 shares of the total share capital.
Cash dividend in latest three years (including the report period)
Unit: RMB
| Year for bonus shares | Amount for cash dividend (tax included) | Net profit attributable to shareholders of listed company in consolidation statement for bonus year | Ratio in net profit attributable to shareholders of listed company contained in consolidation statement | cash dividend by other ways (such as repurchase shares) | proportion for cash dividends in other ways to the net profit attributable to ordinary shareholders of listed companies in the consolidated statements | Amount for cash dividend (including other ways) | Net profit attributable to shareholders of listed company in consolidation statement for bonus year (including other ways) |
| 2018 | 143,163,860 | 452,965,935 | 31.61% | 0% | 143,163,860 | 31.61% | |
| 2017 | 124,207,377 | 825,388,312 | 15.05% | 0% | 124,207,377 | 15.05% | |
| 2016 | 207,533,556 | 797,721,576 | 26.02% | 0% | 207,533,556 | 26.02% |
Note:
1. The actual amount of the cash dividend distributed and capital reserve transferred will be determined according to the total sharecapital on the capital reserved registration date for profit distribution implementation.2. Dividends from equity incentives for restricted shares are distributed by the company itself.The Company gains profits in the report period and the retained profit of parent company is positive but no plan of cash dividendproposed□ Applicable √ Not applicable
II. Proposal of profit distribution preplan or share conversion from capital public reserve inthe report period
√Applicable □ Not applicable
| Distributing bonus shares for every 10 shares (share) | - |
| Distributing cash dividend for every 10 shares (tax included) (RMB) | 0.5 |
| Shares added for every 10-share base (Share) | 1 |
| Equity base for distribution preplan (share) | 2,863,277,201 |
| Total amount distribution in cash (RMB) (tax included) | 143,163,860 |
| Cash dividend amount in other ways (such as repurchasing shares) (RMB) | - |
| Total cash dividends (including other methods) (RMB) | 143,163,860 |
| Profit available for distribution (RMB) | 440,114,948 |
| Cash distributing accounted for the proportion of the total amount of profit distribution (including other methods) | 100% |
| Particular about cash dividend in the period | |
| If the Company's development stage is not easy to distinguish but there are major capital expenditure arrangements, when the profit is distributed, the proportion of cash dividends in this profit distribution should be at least 20%. | |
| Details of proposal of profit distribution preplan or share conversion from capital public reserve |
| According to the financial report audited by Asia Pacific (Group) CPAs (special general partnership), the net profit attributable to equity holders of the Company in consolidated statement was RMB 452,965,935 and combined capital reserve was 1,095,339,421 in 2018. Since cash dividend distribution bases on the distributable profit of parent company, the Company took 10% of the net profit as stationary surplus reserve which was RMB 3,713,043 based on the net profit RMB 37,130,433 of parent company statement 2018. The allocation for Shareholders in 2018 was RMB 440,114,948. The Board of Directors proposed to distribute every shareholder RMB 0.5 (including tax) for each 10 shares based on the amount 2,863,277,201 shares, and the total amount distribution is RMB 143,163,860 (including tax), and transfer capital reserve into capital with 1 share for every 10 shares to all shareholders based on 2,863,277,201 shares of the total share capital. With total transferred amount of 286,327,720 shares, the total share capital of the Company will be changed from 2,863,277,201 shares to 3,149,604,921 shares. Board of directors consider that this proposal of profit distribution meet the specification of Corporation Law, Accounting Standard for Enterprises and Articles of Association. The actual amount of the cash dividend distributed and capital reserve transferred will be determined according to the total share capital on the capital reserved registration date for profit distribution implementation when the company implements the profit distribution plan. The above profit distribution proposal must be submitted to the 2018 Annual General Meeting of shareholders. |
III. Implementation of commitment
1. Commitments completed by the actual controllers, the shareholders, the related parties, the purchasers,the Company or the other related parties during the report period and those hadn’t been completedexecution by the end of the report period
√Applicable □ Not applicable
| Commitments | Promisee | Type of commitments | Content of commitments | Commitment date | Commitment term | Implementation |
| Commitments for Share Merger Reform | The original non-tradable shareholder Shenzhen International Holdings (SZ) Limited and Xin Tong Chan Industrial Development (Shenzhen) Co., Ltd. | Commitment of share reduction | The Company has implemented share merger reform in May 2006. Till June 2009, the share of the original non-tradable shareholders which holding over 5% total shares of the Company had all released. Therein, the original non-tradable shareholder Shenzhen International Holdings (SZ) Limited and Xin Tong Chan Industrial Development (Shenzhen) Co., Ltd. both are wholly-funded subsidiaries to Shenzhen International | 2006-5-22 | N/A | By the end of the report period, the above shareholders of the Company had strictly carried out their promises. |
| Holdings Limited (hereinafter Shenzhen International for short) listed in Hong Kong united stock exchange main board. Shenzhen International made commitment that it would strictly carry out related regulations of Securities Law, Administration of the Takeover of Listed Companies Procedures and Guiding Opinions on the Listed Companies’ Transfer of Original Shares Released from Trading Restrictions issued by CSRC during implementing share decreasingly-held plan and take information disclosure responsibility timely. | ||||||
| Commitments in report of acquisition or equity change | Foresea Life Insurance Co., Ltd, Shenzhen Jushenghua Co., Ltd. and Chengtai Group Co., Ltd. | Commitment of horizontal competition, affiliate Transaction and capital occupation | Foresea Life Insurance Co., Ltd., Shenzhen Jushenghua Co., Ltd. and Chengtai Group Co., Ltd. issued detailed report of equity change on 29 June 2015, in which, they undertook to keep independent from CSG in aspects of personnel, assets, finance, organization set-up and business as long as Foresea Life Insurance remained the largest shareholder of CSG. Meanwhile, they made commitment on regularizing related transaction and avoiding industry competition. | 2015-6-29 | During the period when Foresea Life remains the largest shareholder of the Company | By the end of the report period, the above shareholders of the Company had strictly carried out their promises. |
| Commitments in assets | Not applicable | |||||
| reorganization | ||||||
| Commitments in initial public offering or re-financing | Not applicable | |||||
| Equity incentive commitment | The listed company | CSG has promised not to provide loans and other forms of financial assistance for restricted stocks for the incentive targets under this plan, including providing guarantees for their loans. | 2017-10-10 | During the implementation of the equity incentive plan | The commitment is in normal performance. | |
| Other commitments for medium and small shareholders | Not applicable | |||||
| Completed on time(Yes/No) | Yes | |||||
| If the commitments is not fulfilled on time, explain the reasons and the next work plan | Not applicable | |||||
2. If there are assets or projects of the Company, which has profit forecast and the report period is still inforecasting period, the Company should explain reasons why they reach the original profit forecast
□ Applicable √ Not applicable
IV. Particular about non-operating fund of listed company which is occupied by controllingshareholder and its affiliated enterprises
□ Applicable √ Not applicableThere was no non-operating fund of listed company which is occupied by controlling shareholder and its affiliated enterprises in thereport period.
V. Explanation from Board of Directors, Supervisory Committee and Independent Directors(if applicable) for “Non-standard audit report” of the period that issued by CPA
□ Applicable √ Not applicable
VI. Particulars about the changes in aspects of accounting policy, accounting estimate andcalculation method compared with the financial report of last year
√Applicable □ Not applicableOn October 29, 2018, the 7th meeting of the 8th Board of Directors reviewed and approved the “Proposal on Changes in AccountingPolicies”. This accounting policy change was issued on June 15, 2018, according to the Ministry of Finance. Notice of the FinancialStatement Format of the Enterprise (Accounting (2018) No. 15), the revision of the financial statement format of the generalenterprise. According to the notification requirements, the company adjusted the relevant content of the accounting policyaccordingly. The company's “Accounts receivable”, “Notes receivable”, “Accounts payable”, “Notes payable”, “Dividendsreceivable”, “Interest receivable” and “Interest payable” "Dividends payable", "Fixed assets", "Fixed assets", "Engineering materials","Construction in progress", "Special payables", "long-term payables", "management expenses", "financial expenses", etc. on theoriginal balance sheet and income statement,. Subjects are subject to adjustments and will be implemented in accordance with therelevant provisions of the Ministry of Finance's Notice on Amending the 2018 Annual General Financial Statement Format.Others are still implemented in accordance with the Enterprise Accounting Standards - Basic Standards promulgated by the Ministryof Finance and the specific accounting standards, application guidelines for business accounting standards, corporate accountingstandards interpretation announcements and other relevant regulations.The Company has conducted necessary communication with the accounting firm on this matter.
VII. Description of major accounting errors within report period that need retrospectiverestatement
□ Applicable √ Not applicableThere were no major accounting errors within report period that need retrospective restatement.
VIII. Description of changes in consolidation statement’s scope compared with the financialreport of last year
√Applicable □ Not applicableOn February 11, 2018, the group established Qingyuan CSG quartz material Co., Ltd. As of December 31, 2018, the group has madea monetary capital contribution of 6 million yuan, and the group holds 100% of its shares.On March 30, 2018, the group established Dongguan CSG Jingyu new material Co., Ltd. As of December 31, 2018, the group hasmade a monetary capital contribution of 24 million yuan, and the group holds 80% of its shares.On May 22, 2018, the group set up Changshu CSG new energy Co., Ltd. As of December 31, 2018, the group has not invested, andthe group holds 100% of its shares.
IX. Engaging and dismissing of CPA firm
CPA firm engaged
| Name of domestic CPA firm | Asia Pacific (Group) CPAs (special general partnership) |
| Remuneration for domestic CPA firm (RMB 0,000) | 300 |
| Continuous life of auditing service for domestic CPA firm | 1 |
| Name of domestic CPA | Zhao Qingjun, Zhou Xianhong |
| Continuous life of auditing service for domestic CPA | 1 |
Whether changed accounting firms in this period or not□ Yes √NoWhether changed the accounting firm during the audit period or not□ Yes √NoAppointment of internal control auditing accounting firm, financial consultant or sponsor√Applicable □ Not applicableAsia Pacific (Group) CPAs (special general partnership) was engaged as audit institute of internal control for the Company in thereport period, and contracted charges was RMB 0.30 million (not including traveling and accommodation expenses).
X. Particular about the Company suspended from the stock market listing and delisting afterthe disclosure of the annual report
□ Applicable √ Not applicable
XI. Issues related to bankruptcy and reorganization
□ Applicable √ Not applicable
XII. Significant lawsuits and arbitrations
□ Applicable √ Not applicable
XIII. Penalty and rectification
□ Applicable √ Not applicable
XIV. Integrity of the Company and its controlling shareholders and actual controllers
□ Applicable √ Not applicable
XV. Implementation of the Company’s stock incentive plan, employee stock ownership planor other employee incentives
√Applicable □ Not applicableOn Oct. 10, 2017, the 3
rd
Meeting of the 8
th
Board of Directors of the Company deliberated and approved 2017 Restricted A- sharesIncentive Plan of CSG Holding Co., Ltd (Draft )and its summary, the Management Method of the Implementation and Review of2017 Restricted A-shares Incentive Plan of CSG Holding Co., Ltd and the Resolution on Applying the General Meeting ofShareholders to Authorize the Board of Directors to Deal With the Related Matters on the Company’s 2017 Restricted A-sharesIncentive Plan. The above contents are detailed in the Announcement of the Resolution on the Third Meeting of the Eighth Session ofthe Board of Directors published in www.cninfo.com.cn Oct.11, 2017. (Announcement No.: 2017-063). The Company’s independentdirectors issued independent opinions on the issues involved with restricted A- shares incentive plan.On Oct. 26, 2017, the Company convened the 5
th
Extraordinary General Meeting in 2017, which deliberated and approved the abovethree proposals. The Resolution on Adjusting the Object and Quantity Granted of 2017 Restricted A-share Incentive Plan and the
Resolution on Firstly Granted Restricted Shares to the Object of 2017 Restricted A-share were deliberated and approved on the
st
provisional meeting of the eighth session board of directors convened on Dec. 11
th
, 2017. It determined to grant 97,511,654restricted shares to 454 objects on Dec. 11, 2017, with price at RMB4.28/share. The reserved restricted shares was 17,046,869 shares.The granting of shares was completed on Dec. 25, 2017 and the specific content was detailed in the Announcement on Completingthe First Granting of 2017 Restricted Shares disclosed in www.cninfo.com.cn on Dec. 22, 2017 (Announcement No.:2017-079).On July 20, 2018, the company held the extraordinary meeting of the 8th Board of Directors and the extraordinary meeting of the 8thBoard of Supervisors, and reviewed and approved the Proposal on Repurchase and Restricting Partially Restricted Stocks ofRestricted Stock Incentive Plan. The independent director of the company issued a consent. Opinions; and on August 6, 2018, thesecond extraordinary shareholders meeting in 2018 was approved. As of September 10, 2018, the company has completed thecancellation procedures for the above-mentioned restricted stocks at China Securities Depository and Clearing Co., Ltd. ShenzhenBranch. The total number of shares of the company was changed from 2,856,769,678 shares to 2,853,450,621 shares.On September 13, 2018, the company convened an extraordinary meeting of the 8th Board of Directors and an ad hoc meeting of the8th Board of Supervisors, and reviewed and approved the Proposal on Granting Restricted Stocks to the 2017 Restricted StockIncentive Plan for Incentive Objects. The grant date for the second reserved restricted stock was September 13, 2018, and thecompany agreed to grant a total of 9,826,580 reserved restricted stocks to 75 incentive targets at a price of 3.68 yuan/share. Theindependent directors have issued independent opinions on the above proposal, and the company's supervisory board has once againverified the list of incentive targets on the grant date. The shares granted have been registered in the Shenzhen Branch of ChinaRegistration and Clearing Corporation and listed on September 28, 2018. The total number of shares of the company has changedfrom 2,853,450,621 shares to 2,863,277,201 shares.On December 12, 2018, the company held the extraordinary meeting of the 8th Board of Directors and the extraordinary meeting ofthe 8th Board of Supervisors, and reviewed and approved the Proposal on Repurchase and Restricting Partially Restricted Stocks ofRestricted Stock Incentive Plan, and reviewed and agreed to repurchase 8 people who have not achieve the requirment and write off.The total number of all restricted stocks that were not eligible for the original incentives but not yet released was limited to 436,719shares, and was approved by the third extraordinary general meeting of 2018 on December 28, 2018. The above restricted stock hasnot completed the cancellation procedure.On December 12, 018, the company held the extraordinary meeting of the 8th Board of Directors and the 8th Extraordinary Meetingof the Board of Supervisors, and reviewed and approved the first release of the company's 2017 A-share restricted stock incentiveplan for the first time. In addition to the fact that the eight incentive targets have not been able to lift the restrictions on sales, the totalnumber of incentives for the conditions for lifting the restrictions is 431, and the number of restricted stocks that can be unlocked is43,353,050 shares, accounting for the current company. 1.51% of the total share capital. The board of supervisors, independentdirectors, and law firms issued separate opinions. The date of the restricted stock release date is December 21, 2018.According to the relevant provisions of the "Accounting Standards for Business Enterprises", the implementation of the Company'srestricted stock will have a certain impact on the Company's financial status and operating results in the next few years. The resultsare based on the annual audit report issued by the accounting firm.
XVI. Major related transaction
1. Related transaction with routine operation concerned
□ Applicable √ Not applicableThere was no related transaction with routine operation concerned in the report period.
2. Related transaction with acquisition of assets or equity, sales of assets or equity concerned
□ Applicable √ Not applicableThere was no related transaction with acquisition of assets or equity, sales of assets or equity concerned in the report period.
3. Related transaction with jointly external investment concerned
□ Applicable √ Not applicableThere was no related transaction with jointly external investment concerned in the report period.
4. Credits and liabilities with related parties
□ Applicable √ Not applicableThere were no credits and liabilities with related parties in the report period.
5. Other major related transaction
□ Applicable √ Not applicableThere was no other major related transaction in the report period.
XVII. Significant contracts and their implementation
1. Trusteeship, contracting and leasing
(1) Trusteeship
□ Applicable √ Not applicableNo trusteeship for the Company in the report period.
(2) Contract
□ Applicable √ Not applicableNo contract for the Company in the report period.
(3) Leasing
□ Applicable √ Not applicableNo leasing for the Company in the report period.
2. Major guarantees
√Applicable □ Not applicable
(1) Guarantee
Unit: RMB 0,000
| Particulars about the external guarantee of the Company (Barring the guarantee for subsidiaries) | ||||||||
| Name of the Company guaranteed | Related Announcement disclosure date | Guarantee limit | Actual date of happening (Date of signing agreement) | Actual guarantee limit | Guarantee type | Guarantee term | Complete implementation or not | Guarantee for related party (Yes or no) |
| Guarantee of the Company for the subsidiaries | ||||||||
| Name of the Company guaranteed | Related Announcement disclosure date | Guarantee limit | Actual date of happening (Date of signing agreement) | Actual guarantee limit | Guarantee type | Guarantee term | Complete implementation or not | Guarantee for related party (Yes or no) |
| Chengdu CSG Glass Co.,Ltd. | 2017-7-31 | 5,000 | 2017-8-16 | 5,000 | Joint liability guarantee | 1 year | Yes | No |
| Dongguan CSG Architectural Glass Co., Ltd. | 2017-7-31 | 11,200 | 2017-8-11 | 10,000 | Joint liability guarantee | 1 year | Yes | No |
| Dongguan CSG Architectural Glass Co., Ltd. | 2017-1-13 | 18,000 | 2017-2-9 | 13,000 | Joint liability guarantee | 1 year | Yes | No |
| Xianning CSG Glass Co., Ltd. | 2017-7-31 | 7,000 | 2017-8-11 | 2,000 | Joint liability guarantee | 1 year | Yes | No |
| Xianning CSG Glass Co., Ltd. | 2017-7-31 | 10,000 | 2017-9-12 | 1,000 | Joint liability guarantee | 1 year | Yes | No |
| Sichuan CSG Energy Conservation Glass Co., Ltd. | 2017-7-31 | 7,000 | 2017-8-11 | 2,000 | Joint liability guarantee | 1 year | Yes | No |
| Sichuan CSG Energy Conservation Glass Co., Ltd. | 2017-1-23 | 5,000 | 2017-4-11 | 2,000 | Joint liability guarantee | 1 year | Yes | No |
| Wujiang CSG Glass Co., Ltd. | 2016-8-12 | 10,000 | 2017-3-7 | 5,000 | Joint liability guarantee | 1 year | Yes | No |
| Wujiang CSG Glass Co., Ltd. | 2017-11-27 | 10,000 | 2017-11-30 | 3,000 | Joint liability guarantee | 1 year | Yes | No |
| Wujiang CSG East China Architectural Glass Co., Ltd. | 2016-8-12 | 10,000 | 2017-4-28 | 6,000 | Joint liability guarantee | 1 year | Yes | No |
| Wujiang CSG East China Architectural | 2017-11-27 | 10,000 | 2017-11-30 | 3,000 | Joint liability guarantee | 1 year | Yes | No |
| Glass Co., Ltd. | ||||||||
| Wujiang CSG East China Architectural Glass Co., Ltd. | 2017-7-31 | 10,000 | 2017-9-14 | 10,000 | Joint liability guarantee | 1 year | Yes | No |
| Dongguan CSG Solar Glass Co., Ltd. | 2017-7-31 | 15,000 | 2017-8-11 | 2,800 | Joint liability guarantee | 1 year | Yes | No |
| Yichang Nanbo Display Co., Ltd. | 2017-5-31 | 3,648 | 2017-6-2 | 3,600 | Joint liability guarantee | 1 year | Yes | No |
| Tianjin CSG Energy-Saving Glass Co., Ltd. | 2016-8-12 | 10,000 | 2017-2-14 | 2,000 | Joint liability guarantee | 1 year | Yes | No |
| Dongguan CSG PV-tech Co., Ltd. | 2017-5-22 | 15,000 | 2017-6-15 | 4,680 | Joint liability guarantee | 1 year | Yes | No |
| Yichang CSG Polysilicon Co., Ltd. | 2017-8-7 | 6,600 | 2017-8-25 | 4,000 | Joint liability guarantee | 1 year | Yes | No |
| Yichang CSG Polysilicon Co., Ltd. | 2017-6-23 | 30,000 | 2017-7-10 | 5,000 | Joint liability guarantee | 1 year | Yes | No |
| Qingyuan CSG New Energy-Saving Materials Co., Ltd. | 2017-9-15 | 5,000 | 2017-9-22 | 2,495 | Joint liability guarantee | 1 year | Yes | No |
| Zhanjiang CSG New Energy Co., Ltd. | 2017-7-31 | 9,000 | 2017-9-26 | 7,650 | Joint liability guarantee | 3 years | No | No |
| Xianning CSG Photovoltaic Glass Co., Ltd. | 2016-8-12 | 30,000 | 2017-1-3 | 19,000 | Joint liability guarantee | 3 years | No | No |
| Xianning CSG Photovoltaic Glass Co., Ltd. | 2017-7-31 | 20,000 | 2017-9-7 | 8,300 | Joint liability guarantee | 3 years | No | No |
| Yichang Nanbo Photoelectric Glass Co., Ltd. | 2017-5-22 | 5,472 | 2017-5-26 | 5,400 | Joint liability guarantee | 3 years | No | No |
| Yichang Nanbo Photoelectric Glass Co., Ltd. | 2016-12-14 | 2,432 | 2017-5-23 | 2,400 | Joint liability guarantee | 1 year | Yes | No |
| Yichang Nanbo Photoelectric Glass Co., Ltd. | 2017-5-22 | 10,032 | 2017-5-31 | 5,549 | Joint liability guarantee | 3 years | No | No |
| Yichang CSG Polysilicon Co., Ltd. | 2017-5-22 | 20,000 | 2017-6-22 | 9,928 | Joint liability guarantee | 3 years | No | No |
| Dongguan CSG PV-tech Co., Ltd. | 2017-11-27 | 20,000 | 2017-12-20 | 13,681 | Joint liability guarantee | 3 years | No | No |
| Wujiang CSG Glass Co., Ltd. | 2017-8-28 | 30,000 | 2017-9-13 | 20,000 | Joint liability guarantee | 3 years | No | No |
| Xianning CSG Glass Co., Ltd. | 2017-8-28 | 25,000 | 2017-9-18 | 14,583 | Joint liability guarantee | 3 years | No | No |
| Dongguan CSG Solar Glass Co., Ltd. | 2017-8-7 | 20,000 | 2017-9-22 | 16,500 | Joint liability guarantee | 3 years | No | No |
| Yichang CSG Polysilicon Co., Ltd. | 2017-6-23 | 20,000 | 2017-6-28 | 11,214 | Joint liability guarantee | 3 years | No | No |
| Sichuan CSG Energy Conservation Glass Co., Ltd. | 2017-9-25 | 15,000 | 2017-9-30 | 8,750 | Joint liability guarantee | 3 years | No | No |
| Hebei CSG Glass Co., Ltd. | 2017-10-10 | 20,000 | 2017-10-30 | 13,679 | Joint liability guarantee | 3 years | No | No |
| Chengdu CSG Glass Co.,Ltd. | 2017-9-25 | 20,000 | 2017-9-28 | 12,828 | Joint liability guarantee | 3 years | No | No |
| Wujiang CSG Glass Co., Ltd. | 2017-11-27 | 10,000 | 2017-11-30 | 3,000 | Joint liability guarantee | 1 year | Yes | No |
| Dongguan CSG Architectural Glass Co., Ltd. | 2017-1-13 | 18,000 | 2017-2-9 | 13,000 | Joint liability guarantee | 1 year | Yes | No |
| Wujiang CSG Glass Co., Ltd. | 2017-8-28 | 10,000 | 2017-9-20 | 2,000 | Joint liability guarantee | 1 year | Yes | No |
| Wujiang CSG Glass Co., Ltd. | 2017-11-27 | 10,000 | 2017-11-30 | 1,000 | Joint liability guarantee | 1 year | Yes | No |
| Wujiang CSG East China Architectural Glass Co., Ltd. | 2017-11-27 | 10,000 | 2017-11-30 | 1,000 | Joint liability guarantee | 1 year | Yes | No |
| Yichang CSG Polysilicon Co., Ltd. | 2017-6-23 | 30,000 | 2017-7-10 | 5,000 | Joint liability guarantee | 1 year | Yes | No |
| Wujiang CSG Glass Co., Ltd. | 2017-8-28 | 10,000 | 2017-9-20 | 5,000 | Joint liability guarantee | 1 year | Yes | No |
| Wujiang CSG East China Architectural Glass Co., Ltd. | 2017-11-27 | 10,000 | 2017-11-30 | 2,000 | Joint liability guarantee | 1 year | Yes | No |
| Chengdu CSG Glass Co.,Ltd. | 2017-5-22 | 5,000 | 2018-4-2 | 4,500 | Joint liability guarantee | 1 year | No | No |
| Sichuan CSG Energy | 2017-5-2 | 5,000 | 2018-4-8 | 2,700 | Joint liability | 1 year | No | No |
| Conservation Glass Co., Ltd. | guarantee | |||||||
| Wujiang CSG Glass Co., Ltd. | 2017-11-27 | 10,000 | 2018-3-7 | 2,000 | Joint liability guarantee | 1 year | Yes | No |
| Chengdu CSG Glass Co.,Ltd. | 2018-7-21 | 6,500 | 2018-8-10 | 4,500 | Joint liability guarantee | 1 year | No | No |
| Xianning CSG Glass Co., Ltd. | 2017-7-31 | 7,000 | 2017-8-11 | 2,000 | Joint liability guarantee | 1 year | Yes | No |
| Wujiang CSG Glass Co., Ltd. | 2018-3-9 | 10,000 | 2018-6-28 | 3,500 | Joint liability guarantee | 1 year | No | No |
| Wujiang CSG Glass Co., Ltd. | 2017-8-28 | 10,000 | 2017-9-20 | 1,000 | Joint liability guarantee | 1 year | Yes | No |
| Wujiang CSG Glass Co., Ltd. | 2018-8-11 | 10,000 | 2018-9-11 | 8,000 | Joint liability guarantee | 1 year | No | No |
| Wujiang CSG Glass Co., Ltd. | 2018-8-11 | 5,000 | 2018-11-30 | 2,551 | Joint liability guarantee | 1 year | No | No |
| Dongguan CSG Solar Glass Co., Ltd. | 2017-11-27 | 3,200 | 2018-6-14 | 3,000 | Joint liability guarantee | 1 year | No | No |
| Tianjin CSG Energy-Saving Glass Co., Ltd. | 2018-4-9 | 5,000 | 2018-6-22 | 2,000 | Joint liability guarantee | 1 year | No | No |
| Wujiang CSG East China Architectural Glass Co., Ltd. | 2017-11-27 | 10,000 | 2017-11-30 | 1,000 | Joint liability guarantee | 1 year | Yes | No |
| Xianning CSG Energy-Saving Glass Co., Ltd. | 2017-7-31 | 7,000 | 2017-8-11 | 3,000 | Joint liability guarantee | 1 year | Yes | No |
| Dongguan CSG Architectural Glass Co., Ltd. | 2018-7-21 | 11,200 | 2018-8-10 | 4,000 | Joint liability guarantee | 1 year | No | No |
| Dongguan CSG Architectural Glass Co., Ltd. | 2018-8-11 | 18,000 | 2018-10-30 | 18,000 | Joint liability guarantee | 1 year | No | No |
| Dongguan CSG Architectural Glass Co., Ltd. | 2018-7-21 | 11,200 | 2018-8-10 | 2,145 | Joint liability guarantee | 1 year | No | No |
| Xianning CSG Glass Co., Ltd. | 2018-7-21 | 5,000 | 2018-8-10 | 3,000 | Joint liability guarantee | 1 year | No | No |
| Hebei Shichuang | 2018-7-21 | 1,500 | 2018-8-10 | 638 | Joint liability | 1 year | No | No |
| Glass Co., Ltd. | guarantee | |||||||
| China Southern Glass (Hong Kong) Ltd. | 2018-7-21 | 6,572 | 2018-8-10 | 6,572 | Joint liability guarantee | 1 year | No | No |
| Sichuan CSG Energy Conservation Glass Co., Ltd. | 2018-7-21 | 6,500 | 2018-8-10 | 2,000 | Joint liability guarantee | 1 year | No | No |
| Sichuan CSG Energy Conservation Glass Co., Ltd. | 2018-7-21 | 6,500 | 2018-8-10 | 1,932 | Joint liability guarantee | 1 year | No | No |
| Wujiang CSG East China Architectural Glass Co., Ltd. | 2018-8-11 | 10,000 | 2018-09-11 | 6,000 | Joint liability guarantee | 1 year | No | No |
| Dongguan CSG Solar Glass Co., Ltd. | 2018-7-21 | 15,000 | 2018-8-10 | 3,200 | Joint liability guarantee | 1 year | No | No |
| Dongguan CSG Solar Glass Co., Ltd. | 2018-7-21 | 15,000 | 2018-8-10 | 693 | Joint liability guarantee | 1 year | No | No |
| Tianjin CSG Energy-Saving Glass Co., Ltd. | 2018-7-21 | 2,000 | 2018-8-10 | 2,000 | Joint liability guarantee | 1 year | No | No |
| Dongguan CSG PV-tech Co., Ltd. | 2018-7-3 | 20,000 | 2018-8-21 | 5,527 | Joint liability guarantee | 1 year | No | No |
| Qingyuan CSG New Energy-Saving Materials Co., Ltd. | 2018-8-11 | 4,330 | 2018-10-23 | 1,910 | Joint liability guarantee | 1 year | No | No |
| Yichang Nanbo Photoelectric Glass Co., Ltd. | 2018-7-21 | 1,520 | 2018-09-26 | 100 | Joint liability guarantee | 1 year | No | No |
| Xianning CSG Energy-Saving Glass Co., Ltd. | 2018-7-21 | 5,000 | 2018-8-10 | 2,000 | Joint liability guarantee | 1 year | No | No |
| Dongguan CSG PV-tech Co., Ltd. | 2017-5-22 | 10,500 | 2017-6-15 | 5 | Joint liability guarantee | 3 years | Yes | No |
| Total amount of approving guarantee for subsidiaries in report period (B1) | 312,621 | Total amount of actual occurred guarantee for subsidiaries in report period (B2) | 387,510 | |||||
| Total amount of approved guarantee for subsidiaries at the end of reporting period (B3) | 453,526 | Total balance of actual guarantee for subsidiaries at the end of reporting period (B4) | 257,530 | |||||
| Total amount of guarantee of the Company( total of three abovementioned guarantee) | |||
| Total amount of approving guarantee in report period (A1+B1+C1) | 312,621 | Total amount of actual occurred guarantee in report period (A2+B2+C2) | 387,510 |
| Total amount of approved guarantee at the end of report period (A3+B3+C3) | 453,526 | Total balance of actual guarantee at the end of report period (A4+B4+C4) | 257,530 |
| The proportion of the total amount of actual guarantee in the net assets of the Company(that is A4+ B4+C4) | 28.29% | ||
| Including: | |||
| Total amount of the aforesaid three guarantees(D+E+F) | |||
| Amount of guarantee for shareholders, actual controller and its related parties(D) | |||
| The debts guarantee amount provided for the guaranteed parties whose assets-liability ratio exceed 70% directly or indirectly(E) | |||
| Proportion of total amount of guarantee in net assets of the Company exceed 50%(F) | |||
| Total amount of the aforesaid three guarantees(D+E+F) | |||
| Explanations on possibly bearing joint and several liquidating responsibilities for undue guarantees (if any) | Nil | ||
| Explanations on external guarantee against regulated procedures（if any） | Nil | ||
| Explanations on Guarantee of the Company for the subsidiaries | The total Guarantee limit was 3,126.21million in the reporting period, and the new Guarantee limit was 1,758.22million, the Company and one of subsidiary Yichang CSG Polysilicon Co., Ltd. jointly guaranteed for Dongguan CSG PV-tech Co., Ltd. | ||
(2) Illegal external guarantee
□ Applicable √ Not applicableNo Illegal external guarantee in the report period.
3. Entrust others to manage cash assets
(1) Entrusted Financing
√Applicable □ Not applicableOverview of Entrusted Financing in the report period
Unit: RMB 0,000
| Type | Sources of funds | Amount of occurrence | Unexpired balance | Overdue outstanding amount |
| Type | Sources of funds | Amount of occurrence | Unexpired balance | Overdue outstanding amount |
| Bank financial products | Own funds | 117,000 | ||
| Brokerage financial products | Own funds | 65,000 | ||
| Total | 182,000 | |||
The specific circumstances of high-risk entrusted financing with large individual amount or low security, poor liquidity, and no costprotection□ Applicable √ Not applicableEntrusted financing appears to be unable to recover the principal or there may be other circumstances that may result in impairment□ Applicable √ Not applicable
(2) Entrusted loans
√ Applicable □ Not applicable
Unit: RMB 0,000
| Accrued of loan | Amount of loan | Unexpired balance | Overdue outstanding amount |
| 30,000 | Own funds | 30,000 |
Note：Mar.22.2019，Above loans capital and income has been withdrew.The specific circumstances of high-risk entrusted loan with large individual amount or low security, poor liquidity, and no costprotection□ Applicable √ Not applicableEntrusted loan appears to be unable to recover the principal or there may be other circumstances that may result in impairment□ Applicable √ Not applicable
4. Other material contracts
□ Applicable √ Not applicableNo other material contracts for the Company in the report period.
XVIII. Social responsibilities
1. Performance of social responsibilities
2018 Annual Social Responsibilities Report of CSG was the 11th year the Company consecutively released social responsibilitiesreport. The report emphasized the year of 2018, systemically formulated the Company concrete actions of how to positively performthe social responsibilities, and the efforts to implement the scientific development perspective, build a harmonious society, andadvance the sustainable development of economic and society. See the full report on www.cninfo.com.cn.
2. Circumstances related to environmental protection
Whether the listed company and its subsidiaries belong to the key pollutant discharge units announced by the environmentalprotection department
| Name of Company or subsidiary | Name of major pollutants and characteristic contaminants | Way of emission | Number of Exhaust vent | Exhaust vent distribution | Emission concentration | Implementation of pollutant emission standards | Total emission | Approved total emission | Excessive emissions |
| Xianning CSG Glass Co., Ltd. | Dust\Soot\ SO2\ Nitrogen oxide | Discharge after the treatment of denitrification and dust removal | 16 | Chimney, Exhaust vent | Dust≤30mg/m?；Soot≤40 mg/m?；SO2≤300 mg/m?；NOx≤350 mg/m?； | 《Emission standard of air pollutants for flat glass industry》(GB26453-2011) | Particulates:39.81t；SO2:636.5t；NOx:1113.89t/a； | Particulates：96.82t/a；SO2:636.5t/a Nitrogen oxides：1113.89t/a | Reach the discharge standard |
| Chengdu CSG Glass Co., Ltd | dust＼soot＼SO2＼Nitrogen oxide | Discharge after the treatment of denitrification and dust removal | 15 | chimney, exhaust vent | dust≤30mg/m?；soot≤30mg/m?；SO2≤304mg/m?；NOx≤350mg/m?。 | 《Emission standard of air pollutants for flat glass industry》(GB26453-2011) | Particulates:72.4t；SO2: 791.3t；NOx :920.7t。 | Particulates：129.395t/a；SO2:1035.162t/a；NOx：1811.536t/a。 | Reach the discharge standard |
| Hebei CSG Glass Co., Ltd. | Particulates＼SO2＼Nitrogen oxide | Discharge after denitrification, desulfurization and dust removal treatment | 10 | chimney, exhaust vent | dust≤30mg/m?；soot≤30mg/m?；SO2≤304mg/m?；NOx≤350mg/m?。 | 《Emission standard of air pollutants for flat glass industry》DB13/2168-2015 Hebei local standard | Particulates:7.4t；SO2:37.4t；NOx :176.6t。 | Particulates：59.78t/a；SO2:498.18t/a；NOx：982.2t/a。 | Reach the discharge standard |
| Qingyuan CSG New Energy-Saving Materials Co., Ltd | SO2＼Nitrogen oxide | Discharge after the treatment of denitrification and dust removal | 4 | chimney, exhaust vent | SO2≤20mg/m?；NOx≤200mg/m?。 | 《Emission standard of air pollutants for flat glass industry》(GB26453-2011) | SO2: 5t；NOx :34.6t。。 | SO2:15.228t/a；NOx :110.28t/a。 | Reach the discharge standard |
| Yichang | PH\COD\ | Discharged to | 3 | Sewage vent | PH:6-9； | 《Sewage | COD：37.5t； | COD： | Reach the |
| CSG Polysilicon Co., Ltd | Ammonia nitrogen\Fluoride | the sewage treatment plant after being treated by the Company's sewage treatment station. | COD≤500mg/L；Fluoride≤10 mg/L。 | Integrated Emission Standards》Level 3 Standard (GB8978-1996)，Fluoride implementation of primary standards | Ammonia nitrogen：0.29t。 | 198.47t/a；Ammonia nitrogen：2.49t/a。 | discharge standard | ||
| Wujiang CSG Glass Co., Ltd | Particulates＼SO2＼Nitrogen oxide | Discharge after the treatment of denitrification and dust removal | 39 | chimney, exhaust vent | Particulates≤40mg/m?；SO2≤200 mg/m?；NOx≤300 mg/m?。 | 《Emission standard of air pollutants for flat glass industry》(GB26453-2011) | Particulates：69.8t；SO2:66.5t；NOx :339t。 | Particulates：76.91t/a；SO2:238.28t/a；NOx：818.04t/a。 | Reach the discharge standard |
| Dongguan CSG Solar Glass Co., Ltd. | dust\soot\SO2\Nitrogen oxide | Discharge after the treatment of denitrification and dust removal | 22 | chimney, exhaust vent | dust≤5mg/m?；soot≤10 mg/m?；SO2≤400 mg/m?；NOx≤650 mg/m?。 | 《Emission standard of air pollutants for flat glass industry》(GB26453-2011) | Particulates8.8t；SO2: 264.9t；NOx :511t。 | Particulates：34.85t/a；SO2:300.99t/a；NOx：535.67t/a。 | Reach the discharge standard |
| Dongguan CSG Architectural Glass Co., Ltd. | pH＼COD＼Ammonia nitrogen | Discharged to the sewage treatment plant after being treated by the Company's sewage treatment station. | 1 | Sewage vent | pH：6~9COD≤16 mg/L；mg/L；Ammonia nitrogen≤0.784 mg/L。 | 《Guangdong Province water pollutant emission limit》（DB44/26-2001）Second period first-level emission standard | COD:1.33t；Ammonia nitrogen:0.02t。 | COD:5.4t/a；Ammonia nitrogen:0.6t/a。 | Reach the discharge standard |
| Dongguan CSG PV-tech Co., Ltd. | waste water：Fluoride＼COD＼Ammonia nitrogen：HF＼NOx＼HCI＼CL2＼NH3＼ | The wastewater is discharged after being treated by the sewage station, and the exhaust gas is discharged | sewage：2，exhaust:18 | Sewage vent，exhaust vent | waste water：SS≤50mg/L；COD≤70 mg/L；Ammonia nitrogen≤10mg/L；Fluoride≤8mg/L；exhaust：NOx≤30mg/m3；HF≤3 mg/m3；CL2≤5mg/m3； | 《Guangdong Province water pollutant emission limit》（DB44/26-2001）Second period first level standard；《Battery industry | waste water：COD：4.39t；Ammonia nitrogen：0.58t；Fluoride：0.44t; exhuast：Nitrogen oxide：17.62t；Fluoride：1.02t；Hydrogen | waste water：COD：14.04t/a；Ammonia nitrogen：1.56t/a；Fluoride：1.56t/a； exhaust： | Reach the discharge standard |
| VOC | after being treated by the exhaust gas treatment tower. | HCI≤5mg/m3；VOC≤30mg/m?。 | pollutant discharge standards》（GB30484-2013）；VOCs refer to《Volatile Organic Compound Emission Standards for the Furniture Manufacturing Industry》（DB44/814-2010）Second time period standard；NH3 implement discharge standards for odor pollutants（GB14554-93）. | fluoride：0.72t；chlorine：0.16t；VOC：0.25t。 | Nitrogen oxide：20.825t/a；：1.5156t/a；Hydrogen fluoride：1.0829t/a；chlorine：0.2363t/a；VOC：1.0986t/a。 | ||||
| Hebei Shichuang Glass Co., Ltd. | dust＼soot＼SO2＼Nitrogen oxide | Discharge after the treatment of denitrification and dust removal | 5 | chimney, exhaust vent | dust≤30mg/m?；soot≤20 mg/m?；SO2≤30 mg/m?；NOx≤300mg/m?。 | 《Electrical Glass Industry Air Pollutant Emission Standards》(GB29495-2013) | Particulates:1.81t；SO2: 0.5t；NOx :12t。 | Particulates：8.2125t/a；SO2:22t/aNOx：39.4t/a。 | Reach the discharge standard |
Construction and operation of pollution prevention and control facilitiesThe Company has built flue gas dust removal and denitrification system on production lines. The system runs normally, and theemission of exhaust gas meets regulations standard. Hebei CSG Glass Co., Ltd., Chengdu CSG Glass Co., Ltd. and Wujiang CSGGlass Co., Ltd. have added flue gas desulfurization facilities, and pollutant emissions have been further reduced.The environmental impact assessment of construction projects and other environmental protection licenseIn 2017, the project for the construction of a photoconductive material production line for light guide plates of Xianning CSGPhotovoltaic Glass Co., Ltd. was newly launched, and environmental impact assessments have been carried out and approved. In 2018,the new jade glass plates project of Dongguan CSG Jingyu new material co., Ltd. had been approved and obtained the environmentalinfluence appraise. The project construction had been completed and had been turned into production commissioning. The operationproject of 120 million cells AG&AF glass plate by Yichang Display Co., Ltd. , in 2018, had been approved and obtained theenvironmental influence appraise which is during the construction period. The subsidiaries have effectively carrying out the “ThreeSimultaneous” procedures for all other new and old projects, and have been rewarded with the pollutant discharge license within thevalidity period. They timely declared the pollutant discharge, carried out the monitoring and reporting of pollutant discharge and paid
the pollutant discharge fee according to the relevant regulations of the state.Emergency response plan system of environment incidentIn accordance with the national requirements, all subsidiaries prepared emergency environmental response plan for environmentincident, organized and carried out expert evaluation and filed with the local environmental protection department as required,conducted the emergency drill against environmental incidents. And there were no major environmental incidents occurred in 2018.Environmental self-monitoring schemeIn accordance with provisions of national laws and regulations and the requirements put forward in the assessment documents of theenvironment impact of construction project and reply, the subsidiaries built on-line monitoring equipment for waste water and wastegas which are put into operation normally. They compared and reviewed the effectiveness of the on-line monitoring facilities on aregular basis. Besides, they also entrusted the third party units to carry out the manual monitoring of the environment and fully monitorthe discharge of the pollutants.Other environmental information to be disclosedThose subsidiaries which were on key monitoring list of the government above municipal level all disclosed their environmentprotection status and made regular updating through websites, local government environmental information platform, display padsand other ways.Other information related to environment protectionCSG always attaches great importance to environmental protection work, actively fulfills its social responsibility, adheres to thedevelopment road of energy saving, emission reduction, low-carbon and environmental protection. Many subsidiaries have beenhonored by the local government for their outstanding environmental protection work. For example, CSG (Xianning) won the awardof “Outstanding Unit for Environmental Protection” in 2018, CSG (Hebei) won the award of “Environmental Social ResponsibleEnterprise” and “Environmental Protection Star Enterprise” in 2018, and Hebei Shichuang won the award of “Environmental SocialResponsible Enterprise” and “Environmental Protection Star Enterprise” in 2018. Yichang Display Co., Ltd. won title of “YichangEco-environmental Protection Award” in 2018.
XIX. Statement on other important matters
√Applicable □ Not applicable1. Short-term Financing BillsOn Dec.14, 2016, the second extraordinary shareholders’ general meeting of 2016 of CSG deliberated and approved the proposal ofthe offering and registration of short-term financing bills, and agreed the Company’s registration and issuance of short-term financingbills with a total amount of RMB 2.7 billion, which could be issued by stages within period of validity of the registration according tothe Company’s actual demands for funds and the status of inter-bank funds. However, the term of each issue shall not be longer thanone year and the registered quota shall not exceed 40 percent of the Company’s net assets.
2. Ultra-short-term financing billsOn May 14, 2018, the company’s 2017 annual shareholders’ meeting deliberated and approved the resolution on the application forregistration and issuance of ultra-short-term financing bills. It agreed that the company should register and issue ultra-short-termfinancing bills with a registered amount not exceeding 4 billion yuan (not subject to the restriction that the amount of ultra-short-ermissued shall not exceed 40% of net assets). With the period of validity of the quota not longer than two years, such ultra-short-termfinancing bills will be issued by installments in accordance with the actual capital needs of the company and the situation of
inter-bank market funds. On Sep. 17, 2018, the Chinese Association of Interbank Market Traders held its 63rd registration meeting in2018, and decided to approve the registration of the ultra-short-term financing bills with a total amount of 1.5 billion yuan and avalidity period of two years. The ultra-short-term financing bills are underwritten jointly by Minsheng Bank of China Limited andIndustrial Bank Co., Ltd, and can be issued by installments within the validity period of registration.
3. Perpetual bondsOn April 15, 2016, the Shareholders’ General Meeting 2015 of CSG deliberated and approved the proposal of application forregistration and issuance of perpetual bonds, and agreed the Company to register and issue perpetual bonds with total amount ofRMB 3.1 billion which could be issued by stages within period of validity of the registration according to the Company’s actualdemand for funds and the capital status of inter-bank market.
4. Medium-term notesOn 10 December 2014, the First Extraordinary Shareholders’ General Meeting 2014 of CSG Holding Co., Ltd deliberated andapproved the proposal of application for registration and issuance of medium-term notes with total amount of RMB 1.2 billion atmost. On 21 May 2015, National Association of Financial Market Institutional Investors (NAFMII) held the 32nd registrationmeeting of 2015, in which NAFMII decided to accept the registration of the Company’s medium-term notes, amounting to RMB 1.2billion and valid for two years. China Merchants Bank Co., Ltd. and Shanghai Pudong Development Bank Co., Ltd. were joint leadunderwriters of these medium term notes which could be issued by stages within period of validity of the registration on Jul.14, 2015,the Company issued the first batch of medium term notes with total amount of RMB 1.2 billion and valid term of 5 years at theissuance rate of 4.94%, which will be redeemed on 14 July 2020.On April 15, 2016, the Shareholders’ General Meeting of 2015 of CSG deliberated and approved the proposal of application forregistration and issuance of medium-term notes with total amount of RMB 0.8 billion, which could be issued by stages within periodof validity of the registration according to the Company’s actual demands for funds and the status of inter-bank funds. On 2 March2018, National Association of Financial Market Institutional Investors (NAFMII) held the 14
th
registration meeting of 2018, in whichNAFMII decided to accept the registration of the Company’s medium-term notes, amounting to RMB 0.8 billion and valid for twoyears. Shanghai Pudong Development Bank Co., Ltd. and China CITIC Bank Corporation Limited were joint lead underwriters ofthese medium-term notes which could be issued by stages within period of validity of the registration. On May 4, 2018, the companyissued the first medium-term notes with a total amount of 800 million yuan and a term of three years. The issue rate was 7%, and theredemption date was May 4, 2021.
On May 22, 2017, the Shareholders’ General Meeting of 2016 of CSG deliberated and approved the proposal of application forregistration and issuance of medium-term notes with total amount of RMB 1 billion, which could be issued by stages within period ofvalidity of the registration according to the Company’s actual demands for funds and the status of inter-bank funds.For details, please refer to www.chinabond.com.cn and www.chinamoney.com.cn.5. Public issuance of corporate bondsOn March 2, 2017, the 2nd Extraordinary General Meeting of Shareholders in 2017 reviewed and approved “the Proposal on thePublic Issuance of Corporate Bonds for Qualified Investors". On February 27, 2019, the First Extraordinary General Meeting ofShareholders in 2019 The “Proposal on Extending the Validity Period of the Shareholders' Meeting for the Public Offering ofCorporate Bonds to Qualified Investors” agreed to issue corporate bonds with a total issue of no more than RMB 2 billion and a termof no more than 10 years.6. The holding of the bondholders' meeting during the reporting period
On August 17, 2018, the company issued the announcement of "Conference on Holding the First Phase Mid-term Noteholders'Meeting of China CSG Holding Co., Ltd. in 2015” and “Announcement on Holding the Meeting of the First Phase Mid-term NotesHolders of China CSG Holding Co., Ltd. in 2018” due to the repurchase and cancellation of the restricted shares of the restrictedequity incentive plan. On August 31, 2018, the company's 2015 first-term medium-term noteholders meeting, 2018 first-phasemedium-term noteholders meeting was held off-site and voted. The 2015 first mid-term note holders meeting and the 2018 firstmid-term noteholders' meeting is not effective as the total voting rights held by the holders attending the meeting did not reachtwo-thirds of the total voting rights as required.7. Payments and interests of other debenture and financial instruments during the reporting period14 Jul.2018, the company had paid the 3
rd
times interest of issued the 1
st
phase medium bill in Jul.14, 2015, total amount as 1.2billion, interest rate 4.94% per year.8. Bank credit status, usage and repayment of bank loans during the reporting periodDuring the reporting period, the company obtained bank credit of 11.012 billion yuan, a quota of 3.958 billion yuan being used, and aquota of 7.054 billion yuan available.
XX. Significant events of subsidiaries of the Company
□ Applicable √ Not applicable
Section VI. Changes in Shares and Particulars about Shareholders
I. Changes in Share Capital1. Changes in Share Capital
Unit: Share
| Before the Change | Increase/Decrease in the Change (+, -) | After the Change | |||||||
| Amount | Proportion (%) | New shares issued | Bonus shares | Capitalization of public reserve | Others | Subtotal | Amount | Proportion (%) | |
| I. Restricted shares | 97,772,560 | 3.94% | 9,826,580 | 14,665,883 | -44,636,523 | -20,144,060 | 77,628,500 | 2.71% | |
| 1. State-owned shares | |||||||||
| 2. State-owned legal person’s shares | |||||||||
| 3. Other domestic shares | 97,772,560 | 3.94% | 9,826,580 | 14,665,883 | -44,636,523 | -20,144,060 | 77,628,500 | 2.71% | |
| Including: Domestic legal person’s shares | |||||||||
| Domestic natural person’s shares | 97,772,560 | 3.94% | 9,826,580 | 14,665,883 | -44,636,523 | -20,144,060 | 77,628,500 | 2.71% | |
| 4. Foreign shares | |||||||||
| Including: Foreign legal person’s shares | |||||||||
| Foreign natural person’s shares | |||||||||
| II. Unrestricted shares | 2,386,374,987 | 96.06% | 357,956,248 | 41,317,466 | 399,273,714 | 2,785,648,701 | 97.29% | ||
| 1. RMB Ordinary shares | 1,509,517,397 | 60.76% | 226,427,610 | 41,317,466 | 267,745,076 | 1,777,262,473 | 62.07% | ||
| 2. Domestically listed foreign shares | 876,857,590 | 35.30% | 131,528,638 | 131,528,638 | 1,008,386,228 | 35.22% | |||
| 3. Overseas listed foreign shares | |||||||||
| 4. Others | |||||||||
| III.Total shares | 2,484,147,547 | 100% | 9,826,580 | 372,622,131 | -3,319,057 | 379,129,654 | 2,863,277,201 | 100% | |
Reason for equity changes√Applicable □Not applicable1. The company's total share capital increased by 372,622,131 shares due to the implementation of the 2017 annual profit distributionand capital accumulation fund to increase share capital.2. The company's total shares fell by 3,319,057 because of the cancellation of some restricted stock of equity incentive plan whichwere bought back.3. The company's total share capital increased by 9,826,580 shares due to restricted stock reserved in the 2017 restricted stockincentive plan granted to incentive targets.
4. As condition of unlock the first restriction period stock of the company's 2017 a-share restricted stock incentive plan has been met,43,353,050 restricted shares were unlocked.5. Due to the change of the company's senior management and the lockup of their shareholding, the Shenzhen branch of Chinasecurities registration and clearing Co., Ltd. shall adjust the restricted shares held by the senior management in accordance withrelevant regulations, and the company’s restricted shares and unrestricted shares changed accordingly.Approval on equity changes√Applicable □Not applicable1. The company's 2017 annual profit distribution and capital accumulation fund to increase the share capital plan was approved bythe fifth meeting of the eighth board of directors held on April 20, 2018 and the 2017 annual general meeting of shareholders held onMay 14, 2018.2. The company's buyback and cancellation of some restricted stock incentive plans was deliberated and passed at the extraordinarymeeting of the 8th board of directors and extraordinary meeting of the 8th board of supervisors on July 20, 2018, and was deliberatedand passed at the 2nd interim general meeting of shareholders on August 6, 2018.3. The company's proposal to grant reserve stock of restricted stock incentive plan 2017 to incentive targets was deliberated andapproved at the extraordinary meeting of the 8th the board of directors and the extraordinary meeting of the 8thboard of supervisorson September 13, 2018.4. The company's proposal to confirm the condition of unlock first restriction period stock has been met was deliberated andapproved at the extraordinary meeting of the 8th board of directors, and the extraordinary meeting of the 8th board of supervisors onDecember 12, 2018.Transfer of ownership of changes in shares√Applicable □Not applicable1. The A-share registration date for 2017 annual profit distribution and the capitalization of capital reserve was on June 26, 2018 andthe ex-dividend date was June 27, 2018. A-shares bonus (or capitalized) were directly recorded in the stockholders’ A-share accountson June 27, 2018. The registration date and ex-dividend date of B shares were June 29, 2018 and June 27, 2018 respectively.B-shares bonus (or capitalized) were directly recorded in shareholders’ B-share accounts on June 29, 2018.2. On September 10, 2018, the company has completed the cancellation procedures of the buyback restricted stock in the Shenzhenbranch of China securities registration and clearing co., Ltd.3. On September 28, 2018, the company has completed the registration and approval procedures of newly granted restricted stock inthe Shenzhen branch of China securities registration and clearing co., Ltd.4. Because the condition of unlock the first restriction period stock of the company's 2017 a-share restricted stock incentive plan hasbeen met, and as the change of senior management and lockup of their shareholdings, the Shenzhen branch of China securitiesregistration and clearing Co., Ltd. Adjusted the company’s restricted shares and unrestricted shares accordingly in accordance withrelevant regulations.
Implementation progress of share repurchase□Applicable √Not applicable
Implementation progress of share buyback reduction through centralized bidding□Applicable √Not applicable
Influence on the basic EPS and diluted EPS as well as other financial indexes of net assets per share attributable to commonshareholders of Company in the latest year and period√Applicable □ Not applicablePlease refer to the main accounting data and financial indicators in this report for the details of the impact of stock changes.Other information necessary to be disclosed or need to be disclosed under requirement from security regulators□Applicable √ Not applicable
2. Changes of restricted shares
√Applicable □ Not applicable
Unit: Share
| Shareholders’ name | Number of shares restricted at Period-begin | Number of shares released in the Year | Number of new shares restricted in the Year | Number of shares restricted at Period-end | Restriction reasons | Released date |
| Chen Lin | 3,207,639 | 1,475,514 | 1,034,463 | 2,766,588 | Executive lockup stocks of 553,317 shares, equity incentives restricted stocks of 2,213,271 shares. | Unlock period in accordance with the requirement of implementation of the Company's restricted stock equity incentive plan, once unlocked executive lockup will be implemented according to relevant policies. |
| Wang Jian | 2,300,000 | 2,300,000 | Equity incentives restricted stocks of 2,300,000 shares. | Unlock period in accordance with the requirement of implementation of the Company's restricted stock equity incentive plan, once unlocked executive lockup will be implemented according to relevant policies. | ||
| Lu Wenhui | 2,405,729 | 1,106,635 | 775,847 | 2,074,941 | Executive lockup stocks of 414,988 shares, equity incentives restricted stocks of 1,659,953 shares. | Unlock period in accordance with the requirement of implementation of the Company's restricted stock equity incentive plan, once unlocked executive lockup will be implemented according to relevant policies. |
| Li Cuixu | 800,000 | 800,000 | Equity incentives restricted stocks of 800,000 shares. | Unlock period in accordance with the requirement of implementation of the Company's restricted stock equity incentive plan, once unlocked executive lockup will be |
| implemented according to relevant policies. | ||||||
| He Jin | 1,600,000 | 736,000 | 716,000 | 1,580,000 | Executive lockup stocks of 276,000 shares, equity incentives restricted stocks of 1,304,000 shares. | Unlock period in accordance with the requirement of implementation of the Company's restricted stock equity incentive plan, once unlocked executive lockup will be implemented according to relevant policies. |
| Yang Xinyu | 2,291,170 | 1,053,938 | 738,901 | 1,976,133 | Executive lockup stocks of 395,226 shares, equity incentives restricted stocks of 1,580,907 shares. | Unlock period in accordance with the requirement of implementation of the Company's restricted stock equity incentive plan, once unlocked executive lockup will be implemented according to relevant policies. |
| Core Management Team | 62,410,653 | 30,256,887 | 11,673,417 | 43,827,183 | Equity incentives | Unlock period in accordance with the requirement of implementation of the Company's restricted stock equity incentive plan. |
| Technology and Business Backbone | 23,305,293 | 10,989,195 | 6,690,656 | 19,006,754 | Equity incentives | Unlock period in accordance with the requirement of implementation of the Company's restricted stock equity incentive plan. |
| Zhao Peng | 2,156 | 1,021,050 | 1,023,206 | Supervisor’s departure lockup stocks of 3,306 shares, equity incentives restricted stocks of 1,019,900 shares. | Unlock period in accordance with the requirement of implementation of the Company's restricted stock equity incentive plan, once unlocked executive lockup will be implemented according to relevant policies. | |
| Li Weinan | 2,549,920 | 1,053,938 | 777,713 | 2,273,695 | Executive’s departure lockup stocks of 692,788 shares, equity incentives restricted stocks of 1,580,907 shares. | Unlock period in accordance with the requirement of implementation of the Company's restricted stock equity incentive plan. |
| Total | 97,772,560 | 46,672,107 | 26,528,047 | 77,628,500 |
Note: In case the unlocking conditions of the restricted stock incentive plan is satisfied, the restricted shares Unlock in three phasesafter 12 months from the date of grant: 40% of the restricted stocks will be available for circulation within the period (from the firsttrading day following the lock-up period of 12 months to the last trading day of lock-up period of 24 months), 30% of the restrictedstocks will be available for circulation within the period (from the first trading day following the lock-up period of 24 months to the
last trading day of the lock-up period of 36 months), and 30% of the restricted stocks will be available for circulation within theperiod (from the first trading day following the lock-up period of 36 months to the last trading day of the lock-up period of 48months).
II. Issuance and listing of Securities
1. Security issued (excluding preferred stock) in the report period
√Applicable □ Not applicable
| Name of stock and its derivative securities | Issue date | Issue price (or interest rate) | Issue volume | Listing date | Number of permitted trading transactions | Transaction termination date |
| Stock class | ||||||
| Southern Glass A | September 13, 2018 | 3.68 | 9,826,580 | September 28, 2018 | 9,826,580 | |
Explanation of the issuance of securities (excluding preferred shares) during the reporting periodOn September 13, 2018, the company convened an extraordinary meeting of the 8th board of Directors and an extraordinary meetingof the 8th board of supervisors, deliberated and approved proposal to grant restricted stocks to the incentive target for the 2017restricted stock incentive plan, the grant date of the reserved restricted stock is determined to be September 13, 2018, the companyissued 9,826,580 reserved restrict stock to 75 incentive targets as the grant price at 3.68 yuan/share. The shares granted have beenregistered in the Shenzhen branch of China registration and clearing corporation and listed on September 28, 2018. The total numberof shares of the company has changed from 2,853,450,621 shares to 2,863,277,201 shares.
2. Particulars about changes of total shares and shareholder structure as well as changes of assets andliability structure
√Applicable □ Not applicable1. Statement on profit distribution plan and capitalization of capital reserve plan of the Company in 2017: based on 2,484,147,547shares of the total share capital while dividends will be distributed, distributing cash dividend of RMB 0.5 (tax included) for every 10shares to all shareholders. Meanwhile the Company will transfer capital reserve into capital with 1.5 shares for every 10 shares to allshareholders based on 2,484,147,547 shares of the total share capital. The program was completed on June 29, 2018, and the totalshare capital was increased to 2,856,769,678 shares after the plan was completed
2. The company repurchased a total of 3,319,057 restricted shares held by the 15 original incentive targets but not yet unlocked. Theshare capital was 2,853,450,621 shares after the repurchase. The cancellation of restricted stock repurchase has been completed onSeptember 10, 2018; the total number of shares of the company was changed from 2,856,769,678 shares to 2,853,450,621 shares.
3. The company grant reserved 9,826,580 restricted shares to 75 incentive targets, the restricted stock grant date is September 13,2018. Upon completion of the grant, the share capital increased to 2,863,277,201 shares, and the listing date of this grant isSeptember 28, 2018. The total number of shares of the company was changed from 2,853,450,621 to 2,863,277,201.
4. On December 12, 2018, the company convened an extraordinary meeting of the 8th Board of Directors and an extraordinarymeeting of the 8th Board of Supervisors, and reviewed and approved the “Proposal on Repurchase and Cancel part of RestrictedStocks of Restricted Stock Incentive Plan”, considered and agreed to repurchase and cancel the total of 436,719 shares of 8 incentivetargets of all restricted stocks that have been granted to them who have not been eligible with stock still under restriction. It wasapproved by the third extraordinary general meeting of shareholders in 2018, held on December 28, 2018. The above restricted stockhas not completed the cancellation procedures at the end of the reporting period, which does not affect the changes in the company'sshare capital during the reporting period.
5. On December 12, 2018, the company convened an extraordinary meeting of the 8th Board of Directors and an extraordinarymeeting of the 8th Board of Supervisors, and reviewed and approved the "proposal on the achievement of condition for unlock thefirst restriction period stock of the 2017 a-share restricted stock incentive plan of the company". Except the 8 incentive objects whohave left the company and are no longer qualified for unlocking, the total number of incentive objects who meet the condition forunlocking is 431, and the number of restricted shares that can be unlocked is 43,353,050, accounting for 1.51% of the total sharecapital of the company at present. The board of supervisors, the independent directors and the law firm have expressed their expressconsents. The unlock date/ listing date of these restricted stock is December 21, 2018.
3. Existing internal staff shares
□ Applicable √ Not applicable
III. Particulars about shareholder and actual controller of the Company
1. Amount of shareholders of the Company and particulars about shares holding
Unit: Share
| Total shareholders at the end of the report period | 151,514 | Total shareholders at the end of the month before this annual report disclosed | 149,447 | Total preference shareholders with voting rights recovered at end of report period (if applicable) | 0 | Total preference shareholders with voting rights recovered at end of the month before this annual report disclosed (if applicable) | 0 | |||||||
| Shareholder with above 5% shares hold or top 10 shareholders | ||||||||||||||
| Full name of Shareholders | Nature of shareholder | Proportion of shares held (%) | Total shares held at the end of report period | Changes in report period | Amount of restricted shares held | Amount of un-restricted shares held | Number of share pledged/frozen | |||||||
| Share status | Amount | |||||||||||||
| Foresea Life Insurance Co., Ltd. – Haili Niannian | Domestic non state-owned legal person | 14.81% | 423,988,067 | 55,302,791 | 423,988,067 | |||||||||
| Foresea Life Insurance Co., Ltd. – Universal Insurance Products | Domestic non state-owned legal person | 3.76% | 107,659,097 | 14,042,491 | 107,659,097 | ||||||
| Shenzhen Jushenghua Co., Ltd. | Domestic non state-owned legal person | 2.75% | 78,757,679 | 10,272,741 | 78,757,679 | pledge | 63,000,000 | ||||
| Foresea Life Insurance Co., Ltd. – Own Fund | Domestic non state-owned legal person | 2.06% | 58,877,419 | 7,679,663 | 58,877,419 | ||||||
| Central Huijin Asset Management Ltd. | State-owned legal person | 1.84% | 52,650,444 | 6,867,449 | 52,650,444 | ||||||
| China Galaxy International Securities (Hong Kong) Co., Limited | Foreign legal person | 1.30% | 37,313,064 | 4,917,019 | 37,313,064 | ||||||
| China Merchants Securities (HK) Co., Limited | State-owned legal person | 1.02% | 29,078,493 | 3,021,785 | 29,078,493 | ||||||
| Shenzhen International Holdings (SZ) Limited | Domestic non state-owned legal person | 0.92% | 26,450,000 | 3,450,000 | 26,450,000 | ||||||
| VANGUARD EMERGING MARKETS STOCK INDEX FUND | Foreign legal person | 0.61% | 17,563,848 | 2,290,937 | 17,563,848 | ||||||
| NORGES BANK | Foreign legal person | 0.49% | 14,166,909 | 1,847,858 | 14,166,909 | ||||||
| Strategic investors or general legal person becomes top 10 shareholders due to shares issued (if applicable) | N/A | ||||||||||
| Explanation on associated relationship among the aforesaid shareholders | Among shareholders as listed above, Foresea Life Insurance Co., Ltd.-Haili Niannian, Foresea Life Insurance Co., Ltd.-Universal Insurance Products, Foresea Life Insurance Co., Ltd.-Own Fund are all held by Foresea Life Insurance Co., Ltd. Shenzhen Jushenghua Co., Ltd. is a related legal person of Foresea Life Insurance Co., Ltd. and Chengtai Group Co., Ltd., another related legal person of Foresea Life Insurance Co., Ltd, which held 36,534,458 shares via China Galaxy International Securities (Hong Kong) Co., Limited. Except for the above-mentioned shareholders, it is unknown whether other shareholders belong to related party or have associated relationship regulated by the Management Regulation of Information Disclosure on Change of Shareholding for Listed Companies. | ||||||||||
| Particular about top ten shareholders with un-restrict shares held | |||||||||||
| Shareholders’ name | Amount of un-restrict shares held at | Type of shares | |||||||||
| Type | Amount | ||||||||||
| year-end | ||||
| Foresea Life Insurance Co., Ltd. – Haili Niannian | 423,988,067 | RMB ordinary shares | 423,988,067 | |
| Foresea Life Insurance Co., Ltd. – Universal Insurance Products | 107,659,097 | RMB ordinary shares | 107,659,097 | |
| Shenzhen Jushenghua Co., Ltd. | 78,757,679 | RMB ordinary shares | 78,757,679 | |
| Foresea Life Insurance Co., Ltd. – Own Fund | 58,877,419 | RMB ordinary shares | 58,877,419 | |
| Central Huijin Asset Management Ltd. | 52,650,444 | RMB ordinary shares | 52,650,444 | |
| China Galaxy International Securities (Hong Kong) Co., Limited | 37,313,064 | Domestically listed foreign shares | 37,313,064 | |
| China Merchants Securities (HK) Co., Limited | 29,078,493 | Domestically listed foreign shares | 29,078,493 | |
| Shenzhen International Holdings (SZ) Limited | 26,450,000 | RMB ordinary shares | 26,450,000 | |
| VANGUARD EMERGING MARKETS STOCK INDEX FUND | 17,563,848 | Domestically listed foreign shares | 17,563,848 | |
| NORGES BANK | 14,166,909 | Domestically listed foreign shares | 14,166,909 | |
| Statement on associated relationship or consistent action among the above shareholders: | Among shareholders as listed above, Foresea Life Insurance Co., Ltd.-Haili Niannian, Foresea Life Insurance Co., Ltd.-Universal Insurance Products, Foresea Life Insurance Co., Ltd.-Own Fund are all held by Foresea Life Insurance Co., Ltd. Shenzhen Jushenghua Co., Ltd. is a related legal person of Foresea Life Insurance Co., Ltd. and Chengtai Group Co., Ltd., another related legal person of Foresea Life Insurance Co., Ltd, which held 36,534,458 shares via China Galaxy International Securities (Hong Kong) Co., Limited. Except for the above-mentioned shareholders, it is unknown whether other shareholders belong to related party or have associated relationship regulated by the Management Regulation of Information Disclosure on Change of Shareholding for Listed Companies. | |||
| Explanation on shareholders involving margin business (if applicable) | N/A | |||
Whether the company’s top 10 common shareholders and the top 10 shareholders of ordinary shares subject to unlimited sales haveagreed to buy back transactions during the reporting period□Yes √ No
2. Controlling shareholder of the Company
The nature of controlling shareholders: No holding bodyThe type of controlling shareholder: Not existExplanation on the Company without controlling shareholderCurrently the Company has no controlling shareholder. Foresea Life Insurance Co., Ltd. is the Company's largest shareholder that hastotally held 597,798,139 shares of the Company via Foresea Life Insurance Co., Ltd.–Haili Niannian, Foresea Life Insurance Co.,
Ltd.–universal insurance products, Foresea Life Insurance Co., Ltd.–own fund, Foresea Life Insurance Co., Ltd.–a combination of itsown funds together with Huatai till the end of the report period, which accounts for 20.88% of the Company’s total shares; its relatedlegal person Shenzhen Jushenghua Co., Ltd. held 78,757,679 shares, which accounts for 2.75% of the Company’s total shares; itsrelated legal person Chengtai Group Co., Ltd. held 47,008,262 shares of B-share via China Galaxy International Securities (HongKong) Co., Ltd and Guosen Securities (Hong Kong) Brokerage Co., Limited, which accounts for 1.64% of the Company’s total shares.Foresea Life Insurance and its related legal persons totally held 25.27% of the Company’s total shares, which is less than 30%,meanwhile, the number of directors recommended by Foresea Life Insurance and its related legal persons was no more than half oftotal number of the Company’s board of directors.Other shareholders of the Company hold less than 5% of the shares.Changes of controlling shareholders in the report period□ Applicable √ Not applicable
3. Actual controller of the Company
The nature of actual controller: no actual controllerThe type of actual controller: Not existExplanation on the Company without actual controllerCurrently the Company has no actual controller. Foresea Life Insurance Co., Ltd. is the Company's largest shareholder that has totallyheld 597,798,139 shares of the Company via Foresea Life Insurance Co., Ltd.–Haili Niannian, Foresea Life Insurance Co.,Ltd.–universal insurance products, Foresea Life Insurance Co., Ltd.–own fund, Foresea Life Insurance Co., Ltd.–a combination of itsown funds together with Huatai till the end of the report period, which accounts for 20.88% of the Company’s total shares; its relatedlegal person Shenzhen Jushenghua Co., Ltd. held 78,757,679 shares, which accounts for 2.75% of the Company’s total shares; itsrelated legal person Chengtai Group Co., Ltd. held 47,008,262 shares of B-share via China Galaxy International Securities (HongKong) Co., Ltd and Guosen Securities (Hong Kong) Brokerage Co., Limited, which accounts for 1.64% of the Company’s total shares.Foresea Life Insurance and its related legal persons totally held 25.27% of the Company’s total shares, which is less than 30%,meanwhile, the number of directors recommended by Foresea Life Insurance and its related legal persons was no more than half oftotal number of the Company’s board of directors.Shareholders with over 10% shares held in ultimate controlling level√Yes □NoNatural personShares held in ultimate controlling level
| Shareholders | Nationality | Whether to obtain the right of abode in other countries or regions |
| Yao Zhenhua | China | No |
| Major occupations and duties | Chairman of Shenzhen Baoneng Investment Group Co., Ltd. | |
| Situation of holding domestic and abroad listed companies over the past 10 years | N/A | |
Changes of actual controller in the report period□ Applicable √ Not applicable
Property right and controlling relationship between the largest shareholder and the Company is as follow: Shenzhen Zheshang Baoneng
Industry Investment partnership Enterprise Limited
Actual controller controlling of the Company by entrust or other assets management□Applicable √Not applicable
4. Particulars about other legal person shareholders holding over 10% shares
□ Applicable √ Not applicable
30%
Shenzhen Zheshang BaonengIndustry Investment partnership
Enterprise Limited
Shenzhen Zheshang BaonengIndustry Investment partnership
Enterprise Limited
100%
100%
CSG Holding
Co., Ltd.
CSG Holding
Co., Ltd.1.64%
1.64%
Chengtai Group
Co., Ltd.
Chengtai Group
Co., Ltd.
Shenzhen
Hualitong
Investment
Co., Ltd.
Shenzhen
Hualitong
Investment
Co., Ltd.
100%
100%
Foresea Life Insurance Co., Ltd.
Foresea Life Insurance Co., Ltd.
4.6%
| 4.6% | 4.6% |
| Shenzhen Jushenghua Co., Ltd. | Shenzhen Shenyue Holding Co., Ltd. | Shenzhen Yueshang Logisitics Co., Ltd. | Kaixinheng Co., Ltd. | Jinfeng Tongyuan Co., Ltd. |
0.68%
Shenzhen Baoyuan Logistics
Co., Ltd
| Shenzhen Baoneng Chuangying Investment partenership Co., Ltd. | Shenzhen Baoyuan Logistics Co., Ltd | |
Yao Zhenhua
Shenzhen Baoneng Investment Group
Co., Ltd.
Shenzhen Baoneng Investment Group
Co., Ltd.
67.40%
67.40%1.92%
1.92%2.75%
2.75%51%
| 51% | 20% | 19.80% |
5. Limitation on share reduction of controlling shareholders, actual controllers, Recombination party andother commitment subjects
□ Applicable √ Not applicable
Section VII. Particulars about Directors, Supervisors, Senior
Executives and Employees
I. Changes of shares held by directors, supervisors and senior executives
| Name | Title | Working status | Sex | Age | Start dated of office term | End date of office term | Shares held at period-begin (Share) | Amount of shares increased in this period (Share) | Amount of shares decreased in this period (Share) | Other changes (share) | Shares held at period-end (Share) |
| Chen Lin | Chairman of the Board | Currently in office | Female | 47 | 2016-11-19 | 2020-05-02 | 3,207,639 | 481,146 | 3,688,785 | ||
| Wang Jian | Secretary of the Party Committee, Deputy Chairman of the Board, CEO | Currently in office | Male | 55 | 2016-01-21 | 2020-05-02 | 2,300,000 | 2,300,000 | |||
| Zhan Weizai | Independent Director | Currently in office | Male | 55 | 2016-12-14 | 2020-05-02 | |||||
| Zhu Guilong | Independent Director | Currently in office | Male | 55 | 2017-05-02 | 2020-05-02 | |||||
| Zhu Qianyu | Independent Director | Currently in office | Female | 44 | 2019-4-10 | 2020-05-02 | |||||
| Zhang Jinshun | Director | Currently in office | Male | 54 | 2017-05-02 | 2020-05-02 | |||||
| Ye Weiqing | Director | Currently in office | Female | 47 | 2016-01-21 | 2020-05-02 | |||||
| Cheng Xibao | Director | Currently in office | Female | 37 | 2016-01-21 | 2020-05-02 | |||||
| Li Jianghua | Chairman of the supervisory board, employee supervisory | Currently in office | Male | 42 | 2019-03-27 | 2020-05-02 | |||||
| Li Xinjun | Supervisor | Currently in office | Male | 51 | 2017-01-13 | 2020-05-02 | |||||
| Gao Changkun | Employee Supervisor | Currently in office | Male | 50 | 2018-08-30 | 2020-05-02 | |||||
| Lu Wenhui | Executive Vice President | Currently in office | Male | 56 | 2017-02-23 | 2020-05-02 | 2,405,729 | 360,859 | 2,766,588 | ||
| Li Cuixu | Vice president | Currently in office | Male | 44 | 2018-04-08 | 2020-05-02 | 800,000 | 800,000 | |||
| He Jin | Vice president | Currently in office | Male | 47 | 2018-04-08 | 2020-05-02 | 1,600,000 | 440,000 | 2,040,000 | ||
| Yang Xinyu | Secretary of the Board | Currently in office | Male | 39 | 2017-05-02 | 2020-05-02 | 2,291,170 | 343,675 | 2,634,845 |
| Pan Yonghong | Director & CEO | Post Leaving | Male | 50 | 2017-02-23 | 2018-06-29 | |||||
| Jin Qingjun | Independent Director | Post Leaving | Male | 62 | 2016-12-14 | 2019-4-10 | |||||
| Zhang Wandong | Chairman of the board of supervisors | Post Leaving | Femal | 50 | 2017-1-13 | 2019-3-27 | |||||
| Zhao Peng | Employee Supervisor | Post Leaving | Male | 57 | 2017-01-11 | 2018-08-30 | 2,875 | 1,019,900 | 1,022,775 | ||
| Li Weinan | Vice president | Post Leaving | Male | 57 | 2017-02-23 | 2019-02-18 | 2,636,170 | 395,425 | 3,031,595 | ||
| Total | 12,143,583 | 6,141,005 | 18,284,588 |
II. Changes of directors, supervisors and senior executives
√Applicable □ Not applicable
| Name | Title | Type | Date | Reason |
| Wang Jian | CEO | Be employed | 2018-07-02 | Senior management employed by the Board of Directors |
| Li Cuixu | Vice president | Be employed | 2018-04-08 | Senior management employed by the Board of Directors |
| He Jin | Vice president | Be employed | 2018-04-08 | Senior management employed by the Board of Directors |
| Zhu Qianyu | Independent Director | Be employed | 2019-04-10 | Election by the independent director |
| Li Jianghua | Chairman of the supervisory board, employee supervisory | Be employed | 2019-04-01 2019-03-27 | Election by the supervisory board Election by the employees meeting |
| Gao Changkun | Employee Supervisor | Be employed | 2018-08-30 | Election the employee supervisory board |
| Pan Yonghong | CEO | Post leaving | 2018-06-29 | Resigned |
| Zhao Peng | Employee Supervisor | Post leaving | 2018-08-30 | Resigned |
| Li Weinan | Vice president | Be employed | 2019-02-18 | Removed |
| Zhang Wandong | Chairman of the board of supervisors | Post leaving | 2019-03-27 | Resigned |
| Jin Qingjun | Independent Director | Post leaving | 2019-04-10 | Resigned |
III. Post-holding
Major professional background, working experience of directors, supervisors and senior executive and their major responsibility inthe Company at presentChen Lin: took posts of Department Manager, General Manager Assistant in Shenzhen Shum Yip Logistics Group Co., Ltd. Atpresent, she is the Senior Vice President of Shenzhen Baoneng Investment Group Co., Ltd., Deputy General Manager in ShenzhenShum Yip Logistics Group Co., Ltd. Chairman of Board of Supervisors of Foresea Life Insurance Co., Ltd., Director of GuangdongShaoneng Group Co., Ltd., Director of Nanning department store Co., Ltd. Chairman of the Board of Jonjee Hi-tech Industrial &Commercial Holding Co., Ltd. Chairman of the Board of Baoneng Automobile Co., Ltd., and Chairman of the Board of theCompany.
Wang Jian: took posts of General Manager and Executive Director of China North Industries Tianjin Corporation, General Manager
of China North Vehicle Co., Ltd., and Deputy Chairman and Chairman of Shanghai Nonferrous Metals E-Commerce Co., Ltd.,General Manager of investment management department of China North Industries Corporation, Chairman of the Board of ChengduYinhe Dynasty Hotel Co., Ltd., Deputy Chairman of the Board of Shenzhen Baoyin Electricity Co., Ltd., Chairman of the Board ofNorth Property Development Company Limited. At present he is Secretary of the Party Committee, Deputy Chairman and CEO ofthe Company.
Zhan Weizai: took posts of Vice Manager of the financial department of Donghui Industrial Co., Ltd, General Manager Assistant ofShenzhen Xili Hotel, Director and Chief Financial Officer of Shenzhen Qiaoshe Industry Co.,Ltd.., the Leader of the audit & lawdepartment of Shenzhe Truism (Group) Company and Vice General Manager of Sinosafe General Insurance Company Limited. Hecurrently holds the post of Supervisor of Shenzhen Dewo Industrial Development Co., Ltd, Supervisor of Shenzhen DewoInvestment Development Co., Ltd., Visiting Professor of Jiangxi University of Finance and Economics, Visiting Professor at SocialSecurity Center of Wuhan University, Chairman of Shenzhen Jiangcairen Education Management Co., Ltd., Vice President, ofShenzhen Research Institute, Jiangxi University of Finance and Economics. Independent Director of Shenzhen Longood IntelligentElectric Co., Ltd., Independent Director of Shenzhen Neptunus Bioengineering Co., Ltd., Independent Director of ShenzhenLiantronics Co., Ltd, Independent Director of Shenzhen Weiye Decoration Group Co., Ltd., and Independent Director of theCompany.
Zhu Guilong: took posts of the researcher of the Institute of Forecasting and Development at Hefei University of Technology, theIndependent Director of Jiangsu Saifutian Steel Cable Co., Ltd. Currently, he is a professor and doctoral tutor of the School ofBusiness Administration, South China University of Technology, and holds a concurrent post of the Vice Chairman of SystemsEngineering Society of China, Executive Director of Chinese Association For Science of Science and S&T Policy, the Vice Chairmanof Guangdong Institute of Technical Economy and Management Modernization, and Guangdong Economic Society, the IndependentDirector of GRG BANKING EQUIPMENT CO., LTD., , Independent Director of Guangzhou Kingmed Diagnostics Group Co., Ltd.,and the Independent Director of the Company.
Zhu Qianyu: took posts of lecturer and associate professor of Central South University for Nationalities, a postdoctoral fellow atPeking University, and an independent director of Jilin Shixian Paper Co., Ltd., At present, he is associate professor at RenminUniversity of China and independent director of the Company.
Zhang Jinshun: took posts of member of the Party Committee and Deputy President of the head office of Ping An Bank, as well asChairman of Board of Ping An Trust Co., Ltd., President and CEO of Shenzhen jushenghua Co., Ltd., and the Secretary of the PartyCommittee. He currently serves as Deputy Chairman of the Board of Shenzhen Baoneng Investment Group Co., Ltd. Chairman ofBoard of Foresea Life Insurance Co., Ltd., General Manager of Chang’an International Trust Co., Ltd.，and Director of the Company.
Ye Weiqing: took posts of the Financial Administrator, Senior Vice President and Director of Shenzhen Baoneng Investment GroupCo., Ltd., Director of Foresea Life Insurance Co., Ltd., Chairman of Board of Qinglan Industry (Shenzhen) Co., Ltd., Director ofJonjee Hi-tech Industrial & Commercial Holding Co., Ltd. At present, she is the Chairman of Board and General Manager ofShenzhen Jushenghua Co., Ltd., Chairman of Board and General Manager of Baoneng Real Estate Co., Ltd., Deputy Chairman ofBaoneng holdings (China) co., Ltd., Chairman of Board of Baoneng South China Investment Co., Ltd, Executive Director andGeneral Manager of Shenzhen Shining Asset Management Co., Ltd, the Executive Director and General Manager of QianhaiE-payment Co., Ltd, Chairman of Board and General Manager of Shenzhen Laihua Property Development Co., Ltd, Chairman ofBoard and General Manager of Shenzhen Liujin Plaza Investment Co., Ltd, the Chairman of Board and General Manager ofShenzhen Shum Yip Logistics Center Investment Development Co., Ltd., Chairman of Board and the Director of Shenzhen Baoneng
Jianye Property Co., Ltd, Chairman of Board and General Manager of Shenzhen Baoneng Century Property Development Co., Ltd.Chairman of Board and General Manager of All City Co., Ltd, Chairman of Board and General Manager of Shenzhen HualitongInvestment Co., Ltd, Director of Shenzhen Baoyuan Logistics Co., Ltd, Chairman of Board of Baoneng Hotel Investment Co., Ltd,Chairman of Board and General Manager of Shenzhen Zhonglin Industry Development Co., Ltd, Director of Shenzhen BaonengInvestment Group Co., Ltd., Director of Shenzhen Shum Yip Logistics Group Co., Ltd. and Director of the Company.
Cheng Xibao: took posts of Deputy Manager and Manager of financial department of Huizhou Olympic Garden Co., Ltd., which is asubsidiary of China Sports Group Industry, Manager of financial department of Shenzhen Xuansheng Investment Co., Ltd., which isa subsidiary of Foxconn, and Manager, Vice President, Executive Vice President of financial department, President Assistant andVice President of Shenzhen Baoneng Investment Group Co., Ltd. At present, she is Vice President of Shenzhen Baoneng InvestmentGroup Co., Ltd. and Vice President of Shenzhen Jushenghua Co., Ltd., Vice President of Baoneng City Development andConstruction Group Co., Ltd., the Supervisor of Xinjiang Qianhai United Property & Casualty Insurance Co., Ltd., Director ofForesea Life Insurance Co., Ltd. Director of Baoneng Automobile Co., Ltd., Director of Qoros Automobile Co., Ltd., Supervisor ofGuizhou Baoneng Automobile Co., Ltd. and Director of the Company.
Li Jianghua: took post of group manager of Ping’an Technology (Shenzhen) Co., Ltd., IT engineer of Shenzhen One Card ClubTechnology Services Co., Ltd., the assistant of general manager and deputy general manager of the Operation Service Department ofthe Information Management Center of Foresea Life Insurance, the deputy general manager of IT Department of Xinjiang QianhaiUnited Property & Casualty Insurance Co., Ltd., the general manager of Integrated Financial Development Department of ForeseaLife Insurance, and chairman of the supervisory board of the Company.
Li Xinjun: took the post of the Chief Financial Officer of Shenzhen Zhongshanglong Industrial Co., Ltd. He currently serves as theGeneral Manager of Shenzhen Zhongzhun Certified Tax Agent Co., Ltd., Chairman of Board of Zhongzhun Certified PublicAccountants (Shenzhen) Office and Supervisor of the Company.
Gao Changkun: took the post of the operation director of Beijing lianxing ketong microelectronics Co., LTD., and the investmentspecialist of Pintree (Shanghai) Equity investment and management Co., Ltd. At present, he is the President of the solar energybusiness division and the supervisor of the employees of the Company.Lu Wenhui: took posts of Vice General Manager of the Company and General manager of Float Glass Business Department of thecompany, the vice president of the company and the general manager of the Engineering and Automotive Glass Business Departmentof the company, the chief economy expert of the company, the director of Enterprise Operation Department, the vice president of theSolar Business Department, the vice president of the company and the president of the Fine Glass Business Department, and thepresident of Shenzhen Monitor Company, a subsidiary company. At present, he is the vice president and the president of the Overseasbusiness unit of the Company.Li Cuixu: took posts of the director of the Safety Production Department of Hebei Shijiazhuang New Cast Pipe Co., Ltd., the projectmanager, assistant general manager and deputy general manager of the Investment and Management Department of China NorthIndustrial Company. He is present the vice president of the company.He Jin: took posts of a the general manager of CSG (Shenzhen) Float Glass Co., Ltd., the vice president of Float Glass Department,the general manager of CSG (Dongguan) Solar Glass Co., Ltd., the general manager of CSG (Chengdu) Co., Ltd. and the generalmanager of CSG (Qingyuan) Energy Saving New Material Co., Ltd. He is currently the assistant president of the company, thepresident of the Flat Panel and Electronic Glass Department and the vice president of the company.
Yang Xinyu: took posts of the Securities Department of Beijing KWM Law Firm, the risk control director, the assistant of thechairman of the board of the Law Department of Honghua International Medical Holding Co., Ltd., and the director of the Audit andSupervision Department, the director of the Stock affairs Department of the company. He is currently the secretary of the board ofdirectors,
Post-holding in shareholder’s unit√Applicable □ Not applicable
| Name | Name of shareholder’s unit | Position in shareholder’s unit | Start dated of office term | End date of office term | Received remuneration from shareholder’s unit or not |
| Chen Lin | Foresea Life Insurance Co., Ltd. | Chairman of Supervisory Committee | Apr. 2012 | Yes | |
| Zhang Jinshun | Shenzhen Juhua Investment and Development Co., Ltd. | President & CEO | Jan. 2016 | Aug. 2018 | Yes |
| Foresea Life Insurance Co., Ltd. | Chairman of Board | Sep. 2017 | No | ||
| Ye Weiqing | Shenzhen Jushenghua Co., Ltd. | Chairman of Board and General Manager | Nov. 2009 | No | |
| Foresea Life Insurance Co., Ltd. | Director | Feb. 2012 | Dec. 2018 | No | |
| Chen Xibao | Shenzhen Jushenghua Co., Ltd. | Vice President | Mar. 2016 | No | |
| Foresea Life Insurance Co., Ltd. | Director | Oct. 2017 | No | ||
| Note of post-holding in shareholder’s unit | N/A | ||||
Post-holding in other unit√Applicable □Not applicable
| Name | Name of other units | Position in other unit n | Start dated of office term | End date of office term | Received remuneration from other unit or not |
| Chen Lin | Shenzhen Shum Yip Logistics Group Co., Ltd. | Deputy General Manager | May 2003 | No | |
| Shenzhen Baoneng Investment Group Co., Ltd. | Senior Vice Present | Oct. 2014 | No | ||
| Guangdong Shaoneng Group Co., Ltd. | Director | Nov. 2015 | Yes | ||
| Nanning department store co., Ltd. | Director | Apr. 2018 | Yes | ||
| Jonjee Hi-tech Industrial & Commercial Holding Co., Ltd. | Chairman of the Board | Nov. 2018 | Yes | ||
| Baoneng Automobile Co., Ltd. | Chairman of the Board | Dec. 2017 | No |
| Zhu Qianyu | Renmin University of China | Associate Professor | Mar. 2010 | Yes | |
| Zhan Weizai | Shenzhen Dewo Industrial Development Co., Ltd, | Supervisor | June 2010 | No | |
| Shenzhen Dewo Investment Development Co., Ltd. | Supervisor | Sep. 2011 | No | ||
| Shenzhen Longood Intelligent Electric Co., Ltd. | Independent director | Oct. 2012 | Yes | ||
| Shenzhen Neptunus Bioengineering Co., Ltd. | Independent director | Aug. 2013 | Yes | ||
| Shenzhen Liantronics Co., Ltd. | Independent director | Nov. 2016 | Yes | ||
| Shenzhen Jiangcairen Education Management Co., Ltd. | Chairman of the Board | Jul. 2017 | No | ||
| Jiangxi University of Finance and Economics Shenzhen Research Institute | Subdecanal | Jul. 2017 | No | ||
| Shenzhen Weiye Decoration Group Co., Ltd. | Independent director | Sep. 2018 | Yes | ||
| Zhu Guilong | South China University of Technology | Professor and Doctoral tutor | Aug. 2000 | Yes | |
| GRG BANKING EQUIPMENT CO., LTD. | Independent director | Jan. 2018 | Yes | ||
| Jiangsu Saifutian Steel Cable Co., Ltd. | Independent director | Aug. 2017 | Dec. 2018 | Yes | |
| Guangzhou Kingmed Diagnostics Group Co., Ltd. | Independent director | Nov. 2015 | Yes | ||
| Zhang Jinshun | Shenzhen Baoneng Investment Group Co., Ltd. | Deputy Chairman of the Board | Mar. 2017 | No | |
| Changan International Trust Co., Ltd. | General Manager | Sep. 2018 | Yes | ||
| Ye Weiqing | Baoneng South China Investment Co., Ltd. | Chairman of the Board | Aug. 2017 | No | |
| Shenzhen Shining Asset Management Co., Ltd. | Executive Director and General Manager | Jun. 2015 | No | ||
| Qianhai E-payment Co., Ltd. | Executive Director and General Manager | Jun. 2014 | No | ||
| Shenzhen Laihua Property Development Co., Ltd. | Chairman of Board and General Manager | Nov. 2016 | No | ||
| Shenzhen Liujin Plaza Investment Co., Ltd. | Chairman of Board and General Manager | Feb. 2014 | No | ||
| Shenzhen Shum Yip Logistics Center | Chairman of Board and General Manager | Feb. 2014 | No |
| Investment Development Co., Ltd. | |||||
| Shenzhen Baoneng Jianye Property Co., Ltd. | Director | Aug. 2013 | No | ||
| Shenzhen Baoneng Century Property Development Co., Ltd. | Chairman of Board and General Manager | Jul. 2013 | No | ||
| All City Co., Ltd. | Chairman of Board and General Manager | Apr. 2013 | No | ||
| Shenzhen Hualitong Investment Co., Ltd. | Chairman of Board and General Manager | Mar. 2012 | No | ||
| Shenzhen Baoyuan Logistics Co., Ltd. | Director | Jun. 2010 | No | ||
| Baoneng Hotel Investment Co., Ltd. | Chairman of Board | Mar. 2010 | No | ||
| Qinglan Industry (Shenzhen) Co., Ltd. | Chairman of Board | Jul. 2012 | May 2018 | No | |
| Baoning Property Co., Ltd. | Chairman of Board and General Manager | May 2012 | No | ||
| Shenzhen Zhonglin Industry Development Co., Ltd. | Chairman of Board and General Manager | May 2012 | No | ||
| Shenzhen Baoneng Investment Group Co., Ltd. | Director | Oct. 2013 | Yes | ||
| Jonjee Hi-tech Industrial & Commercial Holding Co., Ltd. | Director | May 2016 | Nov. 2018 | No | |
| Shenzhen Shum Yip Logistics Group Co., Ltd. | Director | Oct. 2003 | No | ||
| Baoneng Holdings (China) Co., Ltd. | Deputy Chairman | May 2018 | No | ||
| Chen Xibao | Shenzhen Baoneng Investment Group Co., Ltd. | Vice President | Dec. 2017 | Yes | |
| Baoneng City Development and Construction Group Co., Ltd. | Vice President | Oct. 2018 | No | ||
| Xinjiang Qianhai United Property & Casualty Insurance Co., Ltd. | Supervisor | Sep. 2016 | No | ||
| Baoneng Automobile Co., Ltd. | Director | Mar. 2017 | No | ||
| Qoros Automobile Co., Ltd. | Director | Dec. 2017 | No | ||
| Guizhou Baoneng Automobile Co., Ltd. | Supervisor | Jan. 2018 | No | ||
| Li Xinjun | Shenzhen Renda Certified Tax Agent Co., Ltd. | General Manager | Dec. 2004 | Yes | |
| Zhongzhun Certified Public Accountants (Shenzhen) Office | Chairman of Board | Nov. 2010 | Yes |
Punishment of securities regulatory authority in the last three years to the Company’s current and retired directors, supervisors andsenior management during the report period□ Applicable √ Not applicable
IV. Remuneration for directors, supervisors and senior executives
Decision-making procedures, recognition basis and payment for directors, supervisors and senior executives1. Decision-making procedures: The allowances for independent directors, external directors from non-shareholder’s unit andexternal supervisors are planned and proposed by the Remuneration &Assessment Committee of the Board and approved by theShareholders’ General Meeting after deliberation of the Board. Remuneration for senior executives is proposed by the Remuneration&Assessment Committee of the Board and decided by the Board after discussion.2. Confirmation basis of remuneration: The allowances for independent directors and external supervisors are confirmed based onindustry standards and real situation of the Company. The remuneration for senior executives implements floating reward mechanismwith reference to basic salary and business performance. Bonus for performance rewards is withdrawal by proportion quarterlyaccording to return on equity and based on the total net profit after taxation.3. Actual remuneration payment: The allowances for each of the Company’s independent directors, external director fromnon-shareholder’s unit and each external supervisor are RMB 0.10 million per year, paid by actual month of service. The totalremuneration for directors, supervisor and senior executives in the report period was RMB 23.846 million.Remuneration for directors, supervisors and senior executives of the Company within the report period
Unit: RMB0,000
| Name | Title | Sex | Age | Post-holding status | Total remuneration obtained from the Company before taxation | Received remuneration from related party of the Company or not |
| Chen Lin | Chairman of the Board | Female | 47 | Currently in office | Yes | |
| Wang Jian | Secretary of the Party Committee, Deputy Chairman of the Board, CEO | Male | 55 | Currently in office | 408.94 | No |
| Zhan Weizai | Independent Director | Male | 55 | Currently in office | 10 | No |
| Zhu Guilong | Independent Director | Male | 55 | Currently in office | 10 | No |
| Zhu Qianyu | Independent Director | Female | 44 | Currently in office | No | |
| Zhang Jinshun | Director | Male | 54 | Currently in office | Yes | |
| Ye Weiqing | Director | Female | 47 | Currently in office | Yes | |
| Cheng Xibao | Director | Female | 37 | Currently in office | Yes | |
| Li Jianghua | Chairman of the supervisory board Employee Supervisor | Male | 42 | Currently in office | No | |
| Li Xinjun | Supervisor | Male | 51 | Currently in office | 10 | No |
| Gao Changkun | Employee Supervisor | Male | 50 | Currently in office | 27.93 | No |
| Lu Wenhui | Executive Vice President | Male | 56 | Currently in office | 506.10 | No |
| Li Cuixu | Vice president | Male | 44 | Currently in office | 144.95 | No |
| He Jin | Vice president | Male | 47 | Currently in office | 128.57 | No |
| Yang Xinyu | Secretary of the Board | Male | 39 | Currently in office | 185.47 | No |
| Zhao Peng | Employee Supervisor | Male | 57 | Post leaving | 103.53 | No |
| Pan Yonghong | CEO | Male | 50 | Post leaving | 423.01 | No |
| Li Weinan | Vice president | Male | 57 | Post leaving | 406.10 | No |
| Jin Qingjun | Independent Director | Male | 62 | Post leaving | 10 | No |
| Zhang Wandong | Chairman of the supervisory board | Female | 50 | Post leaving | 10 | No |
| Total | 2,384.60 |
Directors and senior management of the company were granted equity incentives during the reporting period√Applicable □Not applicable
Unit: Share
| Name | Title | Number of shares outstanding during the report period | Number of shares already exercised during the report period | The exercise price of the exercised shares during the report period (RMB / share) | Market price at the end of the report period (RMB / share) | The number of restricted stocks held at the beginning of the period | Number of shares unlocked in this period | Number of restricted shares newly granted during the report period | The granting price of restricted stock (RMB / share) | The number of restricted stocks held at the end of the period |
| Chen Lin | Chairman of the Board | 3,207,639 | 1,475,514 | 4.28 | 2,213,271 | |||||
| Wang Jian | Secretary of the Party Committee, Deputy Chairman of the Board, CEO | 2,300,000 | 3.68 | 2,300,000 | ||||||
| Lu Wenhui | Executive Vice President | 2,405,729 | 1,106,635 | 4.28 | 1,659,953 | |||||
| Li Cuixu | Vice president | 800,000 | 3.68 | 800,000 | ||||||
| He Jin | Vice president | 1,600,000 | 736,000 | 200,000 | First grant：4.28 Reserved grant：3.68 | 1,304,000 | ||||
| Yang | Secretary of | 2,291,170 | 1,053,938 | 4.28 | 1,580,907 |
| Xinyu | the Board | |||||||||
| Li Weinan | Vice president | 2,291,170 | 1,053,938 | 4.28 | 1,580,907 | |||||
| Total | 11,795,708 | 5,426,025 | 3,300,000 | 11,439,038 | ||||||
| Remarks (if any) | ①In case the unlocking conditions of the restricted stock incentive plan is satisfied, the restricted shares Unlock in three phases after 12 months from the date of grant: 40% of the restricted stocks will be available for circulation within the period (from the first trading day following the lock-up period of 12 months to the last trading day of lock-up period of 24 months), 30% of the restricted stocks will be available for circulation within the period (from the first trading day following the lock-up period of 24 months to the last trading day of the lock-up period of 36 months), and 30% of the restricted stocks will be available for circulation within the period (from the first trading day following the lock-up period of 36 months to the last trading day of the lock-up period of 48 months). ②In the above directors and senior managers, Mr. Wang Jian, Mr. Li Cuixu and Mr. He Jin (200,000 shares) were granted reservations for restricted shares at a price of 3.68 yuan per share on Sep. 13, 2018. ③ In the above-mentioned directors and senior managers, Ms. Chen Lin, Mr. Lu Wenhui, Mr. He Jin (with the exception of 200,000 shares reserved), Mr. Yang Xinyu and Mr. Li Weinan, are awarded restricted shares on Dec. 11, 2017. The conditions to unlock restricted shares in the first restriction periods have been satisfied after 12 months from the date of award, and therefore, the conditions on restricted shares were lifted on Dec. 21, 2018 in the first restriction periods. The amount of restricted shares involved accounts for 40% of the total number of restricted shares granted. | |||||||||
V. Particulars of workforce
1. Number, professional composition and educational background of employees
| Number of employees in the parent company (person) | 162 |
| Number of employees in major subsidiaries of the Company (person) | 10,638 |
| Total number of employees (person) | 10,800 |
| Total number of employees received salaries in the period (person) | 10,800 |
| Number of retired employees whose costs bore by the parent company and its main subsidiaries (person) | |
| Professional composition | |
| Category of professional composition | Number of professional composition (person) |
| Production personnel | 7,593 |
| Salesman | 599 |
| Technician | 1,435 |
| Financial personnel | 118 |
| Administrative personnel | 1,055 |
| Total | 10,800 |
| Educational background | |
| Category of educational background | Number (person) |
| Doctor | 7 |
| Master | 164 |
| Undergraduate | 2,227 |
| Junior college | 1,989 |
| Degree below junior college | 6,413 |
| Total | 10,800 |
2. Staff remuneration policy
In 2018, the company strengthened the application of performance results in salary management. By introducing the concept oforganizational performance, the company advocated to provide favorable remuneration to high-performance organizations.Meanwhile, employees have been encouraged to improve their personal performance by working hard and make more contributionsto the company, with accordingly rising performance incentives. The effective salary incentive has improved the enthusiasm ofemployees, enhanced the overall performance of the organization and thus help to achieve business objectives.
3. Staff training plan
The company has always attached great importance to the construction of talent team and the education and development ofemployees. Every year, the company sets up special funds for the training of employees’ skills, ability development and qualityimprovement. The company has established all kinds of staff learning and development system and tailored learning anddevelopment system for high-, middle- and basic-level employees to stimulate employees’ internal driving force, enhance enterprisecompetitiveness, and provide strong guarantee for the development of CSG. Based on the sustainable development strategy of H&R,the company will continuously deepen the scientific and systematic operation of learning and development work in order to promotemanagement and increase efficiency.
4. Labor outsourcing
□ Applicable √ Not applicable
Section VIII. Corporate Governance
I. Corporate governance of the Company
In strict compliance with the requirements of the relevant laws and regulation including The Company Law, Securities Law and Ruleof Governance for Listed Company, the Company has been putting efforts in improving the corporate governance, strengtheningmanagement of information disclosure, regulating operation activities and establishing a modern corporate system. At present, thesystem for corporate governance of the Company is basically perfect, operation is regulated, corporate governance is consummated,which accord with the requirements of relevant documents on corporate governance of listed company issued by CSRS.The Company has established the Information Disclosure Management System and promptly improved it in accordance with newlyissued laws and regulations, clarified the standards of insider information, and established inside information insider registrationsystem and record management system. In order to further strengthen the Company's internal information disclosure control, enhancethe disclosure consciousness of relevant personnel, and improve the quality of corporate information disclosure, in 2016, theCompany set up information Disclosure Committee, and formulate Rules for the implementation of the information disclosureCommittee. During the report period, the Company disclosed information with facticity, completeness, timeliness and fairness,strictly fulfilled the responsibilities and obligations of information disclosure of listed companies to ensure that investors are able tokeep abreast of the Company's operation and development strategies. There was no regulatory punishment caused by informationdisclosure in the report period. Meanwhile, the Company delivered the Inside Information Insider Table to Shenzhen Stock Exchangewhen submitting periodic reports. It didn’t exist that insiders used the inside information to trade the Company’s shares before themajor sensitive information which could affect the Company’s share price was disclosed.The Company has seriously implemented the requirements of the relevant regulatory to cash dividends. The Company formulated theReturn plan for Shareholders of CSG Holding Co., Ltd. in the Next Three Years (2018- 2020) according to relevant regulations of theNotice of Further Implementation of Cash Dividends of the Listed Companies (ZJF No.: [2012] 37) and the Regulatory Guidelines ofListed Companies No. 3 - Cash Dividends of Listed Companies (ZGZJHGG No. [2013] 43) issued by China Securities RegulatoryCommission, further improved the Company’s decision-making and supervision mechanism for distribution of profits, and protectedthe interests of investors.During the report period, it did not exist that the Company provided the undisclosed information to the largest shareholder and actualcontroller. And it did not exist that non-operating fund of listed company was occupied by the largest shareholder and its affiliatedenterprises.Is there any difference between the actual condition of corporate governance and relevant regulations about corporate governance forlisted company from CSRC?□Yes √ NoThere are no differences between the actual condition of corporate governance and relevant regulations about corporate governancefor listed company from CSRC.
II. Independency of the Company relative to the largest shareholder’ in aspect of businesses,personnel, assets, organization and finance
The Company has been absolutely independent in business, personal, assets, organization and financial from its substantialshareholders ever since its establishment. The Company had an independent and complete business system and independentmanagement capability.1. In terms of business: The Company owns independent purchase and supply system of the raw resources, complete production
systems, independent sale system and customers. The Company is completely independent from the substantial shareholders inbusiness. The substantial shareholders and their subsidiaries do not engage any identical business or similar business as the Company.2. In terms of personnel: The Company established integrated management system of labor, personnel, salaries and the social security,which were absolutely independent from its holding shareholder’s. Personnel of the managers, person in charge of the financial andother executive managers are obtained remuneration from the Company since on duty in the Company, and never receivedremuneration or take part-time jobs in large shareholders’ company and other enterprises controlled by large shareholders. Therecruitment and dismissal of Directors are conducted through legal procedure since the Company was listed and the manager hasbeen appointed or dismissed by Board of Directors. The Board of Directors and the Shareholders’ General Meeting have not receivedany interference of decisions on personnel appointment and removal from the largest shareholders.3. In terms of asset: the Company is able to operate business independently and enjoys full control over the production system,auxiliary production system and facilities, land use right, industry property and non-patent technology owned or used by theCompany. The investments to the Company from largest shareholder are monetary assets, and the largest shareholder has neveroccupied, damage or intervene to operation on these assets.4. In terms of organization: The Company possessed sound corporate governance structure, established Shareholders’ GeneralMeeting, Board of Directors, Supervisory Committee, appointed general manager, and fixed related function departments. TheCompany had been totally independent from its large shareholders in organization structure. The Company has its own office andproduction sites that are different from those of the large shareholders. The largest shareholder and its related parties didn’t deliverany operation plan and order to the Company, neither influence the independence on management of the Company by any forms.5. In terms of finance: The Company has set up independent financial department, established independent accounting calculationsystem and financial management system (included management system of its subsidiaries). The financial personnel of the Companydidn’t take part-time jobs in units of large shareholder or its subordinate units. The Company had independent bank accounts,separated from the large shareholders. The Company is independent taxpayer, paid taxes independently according the laws and didn’tpay mixed taxes with the large shareholders. The financial decision-making of the Company was independent, and the largeshareholders never interfered the usage of the Company’s capital. The Company never offered guarantee to their large shareholdersand its subordinate units and other related party. The largest shareholder and its related has never occupy or occupy disguised thecapital.
III. Horizontal competition
□ Applicable √ Not applicable
IV. Annual shareholders’ general meeting and extraordinary shareholders’ general meetingconvened in the report period
1. Annual Shareholders’ General Meeting in the report period
| Session of meeting | Type | Ratio of investor participation | Date | Date of disclosure | Index of disclosure |
| The First Extraordinary General Shareholders’ Meeting of 2018 | Extraordinary General Shareholders’ Meeting | 26.99% | 2018-03-15 | 2018-03-16 | Announcement No.: 2018-011（www.cninfo.com.cn） |
| Annual General Shareholders’ Meeting of 2017 | Annual General Shareholders’ Meeting | 27.27% | 2018-05-14 | 2018-05-15 | Announcement No.: 2018-024 （www.cninfo.com.cn） |
| The Second Extraordinary General Shareholders’ Meeting of 2018 | Extraordinary General Shareholders’ Meeting | 26.84% | 2018-08-06 | 2018-08-07 | Announcement No.: 2018-041 （www.cninfo.com.cn） |
| The Third Extraordinary General | Extraordinary General | 26.43% | 2018-12-28 | 2018-12-29 | Announcement No.: |
| Shareholders’ Meeting of 2018 | Shareholders’ Meeting | 2018-074 （www.cninfo.com.cn） |
2. The preference shareholders convening the general meeting whose right to vote has been resumed
□ Applicable √ Not applicable
V. Responsibility performance of independent directors in the report period
1. The attending of independent directors to Board meetings and general shareholders’ meeting
| The situation of independent directors attending the board of directors and shareholders' meetings | |||||||
| Name of independent director | Times of Board meeting supposed to attend in the report period | Times of Presence on the scene | Times of attending by communication way | Times of entrusted presence | Times of Absence | Whether absent the Meeting for the second time in a row or not | Times of Presence |
| Jin Qingjun | 18 | 2 | 16 | No | 3 | ||
| Zhan Weizai | 18 | 2 | 16 | No | 3 | ||
| Zhu Guilong | 18 | 2 | 16 | No | 2 | ||
Explanation of absence for the Board Meeting twice in a rowNot applicable
2. Objection for relevant events from independent directors
Whether independent directors came up with objection about the Company’s relevant matters or not□ Yes √NoDuring the report period, the independent directors did not raise objections to the Company's related matters.
3. Other explanation about responsibility performance of independent directors
Whether the opinions from independent directors were adopted or not√Yes □ NoExplanation of the opinions from independent directors which were adopted or not adoptedIn the report period, independent directors of the Company attended the board meetings and general shareholders’ meetings,conscientiously performed their duties, and put forward constructive opinions or suggestions for the development of the Companystrictly according to the requirements of the Guidelines for Operation of the Listed Companies on Main Board of Shenzhen StockExchange, the Listing Rules of Shenzhen Stock Exchange Stock, the Guidelines for Establishment of Independent Director Mechanismfor Listed Companies and the Article of Association. Each independent director seriously deliberated all motions of the board ofdirectors, gave independent opinions on significant operating management issues, engagement of senior management, internalcontrol construction and so on, which played a positive role in safeguarding the interests of the company and minority shareholders.
VI. Duty performance of the special committees under the board during the reporting period
1. Performance of the audit committee of the BoardThe Audit Committee of the Board of Directors of the Company is constituted with 5 directors, and 3 of them are independentdirectors. The convoker is independent director. During the report period, according to demands of CSRC and Shenzhen StockExchange, and regulations of Rules of Procedure of the Audit Committee of the Board of Directors, Procedure for Annual ReportWork of the Audit Committee, the committee paid attention to the construction of corporate internal control system, audited theinternal audit report and financial report periodically, diligently and faithfully. They performed the following duties:
①Deliberate the Company’s financial statement and issue opinionsDuring the reporting period, in accordance with the requirements of the CSRC, the Audit Committee reviewed the relevant annualwork plan for the audit of annual reports submitted by certified public accountants before the annual audited certified publicaccountants entered the market, and provided guidance opinions; At the same time, the basis, principles, and methods for thepreparation of the Company's accounting statements are in compliance with the relevant provisions of national laws and regulations,and in all major respects they fairly reflect the financial status of the Company on December 31, 2018 and its operating results in2018.②Supervise the audit works conducted by the accountant firmThe Audit Committee communicated with the accounting firms and provides guidance and requirements for the annual financialreport audit work and the plans and arrangements for the internal control report audit work. After the CPA came into the audit, themembers of the Audit Committee kept close contact with the Company and the main project responsible personnel to understand theprogress of the audit work and the concerns of the accountants, and timely feedback to the company’s relevant departments to ensurethat the annual audit and information disclosure work was conducted as scheduled.③ Summarize report on the audit works conducted by the accountant firm in previous yearAsia Pacific (Group) CPAs (special general partnership) strictly follows the China Auditing Standards and practices diligently, payingattention to the communication with the management and the audit committee, which reflects strong professional knowledge, goodprofessional ethics and risk awareness. The firm successfully completed the company’s 2018 financial statement audit work andinternal control audit work, and the audit quality is trustworthy.2. Performance of the remuneration and examination committee of the BoardThe remuneration and examination committee of the Board of Directors of the Company is constituted with 4 directors, and 3 ofthem are independent directors. The convoker is independent director.①During the reporting period, the Compensation and Assessment Committee examined the remuneration of the management team ofCSG and approved to report such remuneration to the board of directors for consideration.②According to regulations of Rules of Procedure of The Remuneration and Appraisal Committee, the Remuneration and AppraisalCommittee makes examination on the disclosed remuneration of the directors, supervisors and senior executives and thought itaccorded with the relevant laws and regulations of the remuneration and appraisal system of the Company.③The remuneration and examination committee deliberated the relevant items of equity incentive, relevant beneficiary avoiding forvote, and the deliberation results were submitted to the Board.3. Performance of the nomination committee of the BoardThe nomination committee of the Board of Directors of the Company is constituted with 5 directors, and 3 of them are independentdirectors. The convoker is independent director.Nomination committee of the Board performed evaluation on the work of the Board, and believed that the directors of 8
th
session ofthe Board abided by the State laws, administrative rules and regulation of Article of Association since they took office. They attendedor delegated to attend the Board Meeting and general meeting of shareholders on time, performed voting rights based on relevantregulations, actively kept eyes on the management situation of the Company, and performed the duty of Directors diligently.4. Performance of the strategy committee of the BoardThe strategy committee of the Board of Directors of the Company is constituted with 4 directors, and 1 of them is independentdirectors.As the special institution responsible for the long-term development strategy and significant investment decision-making, the strategycommittee made earnest research on the significant decisions affecting the Company’s development and issued relevantrecommendations according to the procedure rules of the strategy committee. During the reporting period, the committee considered
the profit distribution plan, and held the view that the profit distribution plan conformed to the requirements of the Company Law,the Enterprise Accounting Principles and the Articles of Association, and agreed to submitted the same to the board and generalmeeting for consideration. At the same time, the strategy committee considered issues concerning significant operation management,guarantee for controlling subsidiaries, related transaction, and investment projects of the Company, which were submitted to theboard for consideration.
VII. Performance of the Supervisory Committee
During the report period, the Supervisory Committee found whether there was risk in the Company in the supervisory activities.□ Yes √ NoThe Supervisory Committee had no objection on the supervised events during the report period.
VIII. Performance examination and incentives of senior management
On December 21, 2018, the company held an extraordinary meeting of the 8th board of directors, and reviewed and approved the“Proposal on the Compensation of CSG Group Management Team”. In order to maximize the company's operating efficiency, fullymobilize the enthusiasm of the management team to ensure the completion of the company's various operational indicators, the boardof directors agreed to adopt an annual salary system for the company's management team. The annual salary system consists of afixed annual salary and performance bonus. The performance bonus is an incentive income. The company conducts accountingaccording to the overall business situation and individual assessment. The specific payment rules are implemented according to thecompany's annual assessment plan. These measures have been implemented since 2018.
IX. Internal Control
1. Particulars about significant defects found in the internal control during the report period
□ Yes √ No
2. Self-appraisal report of internal control
| Disclosure date of full text of self-appraisal report of internal control | 17 April 2019 | ||
| Disclosure index of full text of self-appraisal report of internal control | More details found in “Report of Internal Control of CSG for year of 2018” published on Juchao Website (http://www.cninfo.com.cn) | ||
| The ratio of the total assets of the units included in the scope of evaluation to the total assets of the Company's consolidated financial statements | 92% | ||
| The ratio of the operating income of the units included in the scope of evaluation to the operating income of the Company's consolidated financial statements | 95% | ||
| Standards of Defects Evaluation | |||
| Category | Financial Reports | Non-financial Reports | |
| Qualitative criteria | Major defects: A. Fraud of directors, supervisors and senior management; B. Ineffective control environment; C. Invalid internal supervision; D. Major internal control defects found and reported to the management but haven’t been corrected after a reasonable time; E. Material misstatements are found by the external audit but haven’t been found in the process of internal control; | Major defects: A. Major decision-making mistakes caused by decision-making process of key business; B. Serious violation of state laws and regulations; C. Serious brain drain of senior and middle management and or personnel at key technological posts; D. Major or significant defects found in the internal control evaluation have not been rectified and reformed; E. The company's major negative news frequently | |
| F. Financial reports submitted during the reporting period completely cannot meet the needs and are severely punished by regulatory agencies; G. Other major defects that may affect the report users’ correct judgment. Significant defects: A. Defects or invalidation of important financial control procedures; B. Significant misstatements are found by the external audit but haven’t been found in the process of internal control; C. Financial reports submitted during the reporting period have mistakes frequently; D. Other significant defects that may affect the report users’ correct judgment. Common defects: Other control defects except for major defects and significant defects. | appears on media; Significant defects: A. Big deviation of execution caused by executive routine of key business; B. Regulatory authorities impose large amount of fines because the violation of laws and regulations; C. Defects or invalidation of important business’ internal control procedures; Common defects: Other control defects except for major defects and significant defects. | |
| Quantitative standard | Major defects: A. Amount of net profit affected by misstatements (based on consolidated statements): amount affected by misstatements is equal to or greater than 3% of net profit and the absolute amount is no less than 30 million yuan; B. Amount of assets and liabilities affected by misstatements (based on consolidated statements): amount affected by misstatements is equal to or greater than 1% of total assets. Significant defects: A. Amount of net profit affected by misstatements (based on consolidated statements): not belong to major defects and amount affected by misstatements is equal to or greater than 2% of net profit and the absolute amount is no less than 20 million yuan; B. Amount of assets and liabilities affected by misstatements (based on consolidated statements): amount affected by misstatements is equal to or greater than 0.5% of total assets but less than 1% of total assets. Common defects: Defects except for major and significant defects. | Major defects: A. Amount of direct property loss: the direct loss amount is equal to or greater than 30 million yuan; B.Group's reputation: major negative news spreads in numerous business areas or is widely reported by national media and causes significant damages to the corporate reputation which takes more than six months to be restored. Significant defects: A. Amount of direct property loss: the direct loss amount is equal to or greater than 20 million yuan but less than 30 million yuan; B. Group's reputation: negative news spreads inside the industry or is reported or focused by local media and causes certain damages to the corporate reputation which takes more than three months but less than six months to be restored. Common defects: A. Amount of direct property loss: defects except for major and significant defects. B. Group's reputation: negative news spreads within the group and causes minor damages to the corporate reputation which takes less than three months to be restored. |
| Amount of significant defects in financial reports | ||
| Amount of significant defects in non-financial reports | ||
| Amount of important defects in financial reports | ||
| Amount of important defects in non-financial reports | ||
Notes of the major issues related to internal control：
As of the issuance date of the report, the company did not find internal control information which might have a significant impact onthe investors’ understanding of the internal control evaluation report or their evaluation of internal control of the company or on theinvestment decisions made by investors.
X. Audit report of internal control
√Applicable □ Not applicable
| Deliberations in Internal Control Audit Report | |
| According to Guidelines of Enterprise Internal Control Audit and the relevant requirements of CICPA auditing standards, Asia Pacific (Group) CPAs (special general partnership) (hereinafter referred to as AP) audited the effectiveness of internal control over financial statements of the Company up to 31 December 2018, issued AP Ya-Kuai- A-Zhuan-Zi (2019) No. 0021 Internal Control Audit Report and made the following opinions: AP thought that CSG Holding Co., Ltd. maintained effective internal control over financial statements in all major aspects according to the Fundamental Norms of Enterprise Internal Control and relevant rules on December 31, 2018. | |
| Date of disclosing the internal control audit reports | 17 April 2019 |
| Disclosure index of internal control audit report | More details can be found in 2018 Internal Control Audit Report of CSG released on Juchao Website (http://www.cninfo.com.cn) |
| Type of the auditor’s opinion | Standard unqualified opinion |
| Whether there are major flaws in the non-financial report or not | No |
Whether the CPAs firm issued an Audit Report on Internal Control with non-standard opinion or not?□Yes √ NoWhether the Audit Report on Internal Control from the CPAs firm is in consistent with the Self-appraisal Report from the Board ornot?√ Yes □ No
Section IX. Financial Report
I. Report of the Auditors
| Type of Auditor’s Opinion | Standard and unqualified |
| Issue date of Report of the Auditors | 16 April 2019 |
| Name of Auditor’s organization | Asia Pacific (Group) CPAs (special general partnership) |
| Reference number of Report of the Auditors | Ya-Kuai- A-Shen-Zi (2019) No. 0034 |
| Name of CPA | Zhao Qingjun, Zhou Xianhong |
Auditor’s Report
To the shareholders of CSG Holding Co., Ltd.:
I. Opinion
We have audited the accompanying financial statements of CSG Holding Co., Ltd. (hereinafter “the Company”), which comprise theSeparate/Consolidated Statements of Financial Position as at 31 December 2018, and the Separate/Consolidated Statements of profit orloss, the Separate/Consolidated Statements of changes in equity and the Separate/Consolidated Statements of cash flows for the yearthen ended, and the notes to the financial statements.
In our opinion, the financial statements attached were prepared in line with the regulations of Accounting Standards for BusinessEnterprises in all significant aspects which gave a true and fair view of the consolidated and parent financial position of the Companyas at Dec. 31, 2018 and the consolidated and parent business performance and cash flow of the Company for 2018.
II. Basis of Opinion
We conducted our audit in accordance with Standards on Auditing for Certified Public Accountants. Our responsibility is to express anopinion on these financial statements based on our audit. Those standards require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. Webelieve that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
III. Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financialstatements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and informing our opinion thereon, and we do not provide a separate opinion on these matters. We determine the followings are key auditmatters in need of communication in our report.
I) Impairment of fixed assets and the construction in progress
1. Matter description
As disclosed in the financial report, by 31st Dec 2018, Impairment provision for construction in progress of the CSG Group was RMB366.69 million , Impairment provision for the fixed assets was RMB111.68 million. On 31 may 2018, the state introduced the ‘Circularof matters concerning Photovoltaic Power Generation in 2018’, The policies mentioned above considerably affected the operations of
CSG’s solar industry, by ‘the section 8 of accounting standards for business enterprises- impairments of assets’, the management of thecompany identified and ran impairment tests for some parts of related assets showing a sign of impairment. During the impairment test,the management has engaged an independent valuer to assist in the identification and valuation of the recoverable amount of relevantasset, and compared it with the book value of the corresponding assets. The test results showed that the recoverable amount of relatedassets was less than its book value. According to the difference, the provision for impairment of fixed assets and construction inprogress should be noted by the company.
Due to the procedure of related assets impairment involved significant decisions and predictions made by the management team, wetherefore have confirmed this as a key audit matter.
2. Countermeasures of Audit
1 Understood and tested the effectiveness of its execution of the internal control system of the fixed assets and the construction inprogress;
2 Evaluated management's identification of relevant asset groups assertions and the amount of assets allocated in each asset group;
3 Checked the management's process of identifying the signs of impairment of related assets and assessed the reasonableness of theirjudgments;
4 Discussed with the management the specific process of the relevant asset impairment test, and understood the evaluation andapproval process of the impairment test results;
5 Evaluated the management's use of the valuation method, discussed with the independent valuer the appropriateness of the valuationmethod, and independently compare the key assumptions, parameters and discount rates of the assessment with historical financialdata and industry trends analysis;
6 Checked the asset in field survey and understood use of relevant asset and Reviewed relevant disclosures in the presentation offinancial statements
II) Provision of Impairment in goodwill
1. Matter description
As disclosed in Notes, in December 31, 2018, the original value of CSG Group goodwill RMB 397.39 million as its acquiredShenzhen CSG Display Technology Co., Ltd. The management is required to annually perform the impairment test for goodwill. Themanagement has engaged an independent valuer to assist in the identification and valuation of the recoverable amount of asset groups.The management tests goodwill for impairment by estimating the recoverable amounts of the asset groups that goodwill is allocated to,and then comparing these recoverable amounts with the carrying value of those asset groups and goodwill. The result of theimpairment test indicated that the recoverable amount of the relevant asset group of goodwill is lower than the book value, and theprovision for goodwill impairment should be noted by company. The group predicted the recoverable amounts which involves forecastof asset groups future cash flows, including significant judgments and assumptions including the selling price, the cost of production,the operating expense, the discount rate, the growth rate, etc. As the goodwill impairment test involved a complex process and thesignificant judgments of the Company’s management, therefore, we consider this matter as key audit matters.
2. Countermeasures of Audit
1 Understood and tested the effectiveness of its execution of the internal control system of the provision of impairment in goodwill;
2 Checked whether goodwill was allocated to each of the cash-generating units in a reasonable methods;
3 Compared the relevant asset groups actual results in 2018 with their corresponding estimates made in the prior year to evaluate thereliability of the management’s estimates on cash flows;
4 Discussed with the management on key assumptions and assessed its rationality, including but not limited the key parameters forobtaining significant management estimates and judgments, such as the revenue growth rate, the gross profit margin, the expensegrowth rate and the discount rate etc., compared and analyzed historical data and industry level of relevant asset groups;
5 Discussed with the valuation experts the appropriateness of the application of the valuation method, and make independent
comparison and analysis of the key assumptions, parameters and discount rates of the assessment combined with historical financialdata and industry development trends;
6 Checked the goodwill impairment test model calculation accuracy ;
7 Checked whether the impairment of goodwill have been properly presented and disclosed in the financial statements as required.
IV. Other information
The management layer of the Company (hereinafter referred to as the management layer) shall be responsible for other information,including the information covered in the financial report, but excludes financial statements and our audit report.
Our audit opinions on financial statements do not cover other information; we will not make the authentication conclusion on otherinformation in any form.
Combining our audit of the financial statement, our responsibility is to read other information, during which, we shall consider thatwhether other information has any significant difference with the financial statement or the circumstance we know during the audit oris there any significant misstatement.
Based on the work we already executed, if we confirm that there are significant misstatements in other information, we shall reportsuch a fact. On such aspect, there is nothing to report.
V. Management’s Responsibility for the Financial Statements
Management of the Company is responsible for the preparation and fair presentation of these financial statements in accordance withthe requirements of the Accounting Standards for Business Enterprises, and for such internal control as management
determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraudor error.
In preparing financial statements, the management layer is responsible for assessing the Company's sustained business capability,disclosing matters related to continue operating，using the going-concern assumption unless management either intends to liquidate theCompany or to cease operations, or has no realistic alternative but to do so.
The governance layer is responsible for supervising the financial reporting process of the company.
VI. The responsibility of Certified Public Accountants for the financial statement auditing.
Our objective is to obtain reasonable assurance on whether there is no misstatement in overall financial statements caused by fraud orerror, and issue the audit report with audit opinions. Reasonable assurance is the high-level assurance, but it can’t assure that a certainmajor misstatement can be always found when auditing according to the audit standard. The misstatement may be caused bymalpractices or
error. If the misstatements within the rational expectations may affect the economic decision of the financial statement user accordingto the financial statement, it shall be deemed that the misstatement is significant.
During the process of conducting the audit work according to audit standards, we apply professional judgment and keep professionalskepticism. Meanwhile, we also perform the following tasks:
(1) Identify and Estimate the significant misstatement risks of the financial statement due to the malpractices and error, design andimplement the audit procedures to respond those risks, and obtain adequate and proper audit evidence serving as the basis ofpublishing the audit opinions. Since malpractices may involve in collusion, falsification, intentional omission, misrepresentation oroverriding the internal control, the risk of failing to detect a significant misstatement due to malpractices is higher than the risk offailing to detect a significant misstatement due to the error.
(2) Understand the internal control related to audit, so as to design appropriate audit procedures.
(3) Estimate the appropriateness of the accounting policies selected by the management layer, and the rationality of making accountingestimate and relevant disclosures.
(4) Draw a conclusion on the appropriateness of the going concern assumption used by the management layer. Meanwhile, accordingto the obtained audit evidence, it may cause to come to the conclusion that there are substantial doubtable events or major uncertaintyfor the sustainable operation ability of the Company. In case thatwe come to the conclusion that there is a significant uncertainty, the audit standards require us to remind the users of the statements topay attention to relevant disclosures in the financial statements in the audit report; In case of any insufficient disclosure, we shall givemodified opinions. Our conclusion is based on the available information up to the audit report day. However, the future events orcircumstances may cause the Company cannot continue to operate.
(5) Estimate the overall presentation, structure and content (disclosure included) of the financial statements, and Estimate whether thefinancial statements fairly reflect relevant transactions and matters.
(6) Acquire adequate and appropriate audit evidences on the financial information of the entity or business activities of the Company,and give audit opinions on the consolidated financial statements. We are responsible for guiding, supervising and executing the audit ofthe Group, and take all responsibilities for the audit opinions.
We communicate with the governance layer about the audit scope, schedule, significant audit findings and other matters within theplan, including the noteworthy internal control defects recognized by us during the audit.
We also provide statements to the governance layer on the compliance with the professional ethics requirement related to theindependence, and communicate withthe governance layer on all relationships and other matters that may reasonably be considered to affect our independence, as well asrelevant preventive measures.
From the matters that we have communicated with the governance layer, we confirm the most important matters for the audit of thecurrent financial statements, and thus constitute the key audit matters. We describe these matters in our audit report, unless laws andregulations prohibit the public disclosure of these matters, or in rare cases, if it is reasonably expected that the negative consequencesof communicating a matter in the audit report will surpass the benefits in the public interests, we confirm that the matter shall not becommunicated in the audit report.
| Asia-Pacific (Group) Certified Public Accountants | Certified Public Accountant of China |
| (special general partnership) | |
| Beijing, China | Certified Public Accountant of China |
16April 2019
CSG HOLDING CO., LTD.CONSOLIDATED AND COMPANY’S BALANCE SHEETSAS AT 31 DECEMBER 2018
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
| 31 December 2018 | 31 December 2017 | 31 December 2018 | 31 December 2017 | ||
| ASSETS | Note | Consolidated | Consolidated | Company | Company |
| Current assets | |||||
| Cash at bank and on hand | 4(1) | 2,226,447,720 | 2,462,605,764 | 1,700,726,151 | 1,681,877,320 |
| Notes receivable and Accounts receivable | 4(2) | 1,311,608,760 | 1,190,470,710 | - | - |
| Inclouding :Notes receivable | 4(2)1 | 719,375,448 | 552,232,420 | - | - |
| Accounts receivable | 4(2)2 | 592,233,312 | 638,238,290 | - | - |
| Advances to suppliers | 4(3) | 91,176,675 | 143,848,023 | 438,167 | 146,132 |
| Other receivables | 4(4)/17(1) | 207,424,295 | 205,939,019 | 2,912,516,245 | 2,400,334,816 |
| Inventories | 4(5) | 600,139,750 | 685,895,317 | - | - |
| Assets classified as held for sale | 4(6) | 45,983,520 | 45,983,520 | - | - |
| Other current assets | 4(7) | 445,327,449 | 200,847,989 | 300,000,000 | - |
| Total current assets | 4,928,108,169 | 4,935,590,342 | 4,913,680,563 | 4,082,358,268 | |
| Non-current assets | |||||
| Long-term receivables | 17(3) | - | - | 1,200,000,000 | 1,200,000,000 |
| Long-term equity investments | 17(2) | - | - | 4,964,696,831 | 4,795,987,652 |
| Fixed assets | 4(8) | 9,930,843,775 | 11,540,769,697 | 20,926,071 | 22,182,246 |
| Construction in progress | 4(9) | 2,559,179,442 | 1,417,624,618 | - | - |
| Intangible assets | 4(10) | 1,035,731,324 | 1,047,222,407 | 879,146 | 1,742,109 |
| Development expenditure | 4(10) | 74,549,257 | 61,365,537 | - | - |
| Goodwill | 4(11) | 376,720,156 | 397,392,156 | - | - |
| Long-term prepaid expenses | 12,746,609 | 2,223,397 | - | - | |
| Deferred tax assets | 4(12) | 139,529,518 | 80,872,862 | - | - |
| Other non-current assets | 4(13) | 56,825,934 | 51,941,352 | 732,038 | 2,132,041 |
| Total non-current assets | 14,186,126,015 | 14,599,412,026 | 6,187,234,086 | 6,022,044,048 | |
| TOTAL ASSETS | 19,114,234,184 | 19,535,002,368 | 11,100,914,649 | 10,104,402,316 |
CSG HOLDING CO., LTD.CONSOLIDATED AND COMPANY’S BALANCE SHEETS (CONT'D)AS AT 31 DECEMBER 2018
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
| 31 December 2018 | 31 December 2017 | 31 December 2018 | 31 December 2017 | ||
| LIABILITIES AND OWNERS' EQUITY | Note | Consolidated | Consolidated | Company | Company |
| Current liabilities | |||||
| Short-term borrowings | 4(15) | 2,922,679,590 | 3,704,630,909 | 2,000,000,000 | 2,600,000,000 |
| Notes payable and Accounts payable | 4(16) | 1,315,009,263 | 1,613,567,664 | 261,024 | 261,024 |
| Including : Notes payable | 4(16)1 | 105,150,000 | 213,401,622 | - | - |
| Accounts payable | 4(16)2 | 1,209,859,263 | 1,400,166,042 | 261,024 | 261,024 |
| Advances from customers | 4(17) | 206,631,008 | 195,563,465 | - | - |
| Employee benefits payable | 4(18) | 266,459,151 | 272,170,660 | 41,096,020 | 40,856,313 |
| Taxes payable | 4(19) | 111,967,365 | 111,996,764 | 1,099,231 | 1,762,580 |
| Other payables | 4(20) /17(4) | 552,751,187 | 653,357,094 | 1,668,587,218 | 912,523,726 |
| Including : Interest payable | 4(20)1 | 73,612,703 | 34,032,740 | 41,572,125 | 3,090,735 |
| Dividends payable | 4(20)2 | 2,846,362 | - | 2,846,362 | - |
| Other payables | 4(20)3 | 476,292,122 | 619,324,354 | 1,624,168,731 | 909,432,991 |
| Current portion of non-current liabil ities | 4(21) | 819,448,742 | 904,261,397 | - | 180,000,000 |
| Other current liabilities | 300,000 | 300,000 | - | - | |
| Total current liabilities | 6,195,246,306 | 7,455,847,953 | 3,711,043,493 | 3,735,403,643 | |
| Non-current liabilities | |||||
| Long-term borrowings | 4(22) | 2,315,700,000 | 1,554,120,000 | 2,000,000,000 | 1,200,000,000 |
| Long-term payables | 4(23) | 529,910,796 | 1,161,794,247 | - | - |
| Deferred tax liabilities | 4(12) | 22,118,840 | 20,915,954 | - | - |
| Deferred income | 4(24) | 601,825,780 | 562,701,103 | 184,642,520 | 186,526,280 |
| Total non-current liabilities | 3,469,555,416 | 3,299,531,304 | 2,184,642,520 | 1,386,526,280 | |
| Total liabilities | 9,664,801,722 | 10,755,379,257 | 5,895,686,013 | 5,121,929,923 | |
| Shareholders’ equity | |||||
| Share capital | 4(25) | 2,863,277,201 | 2,484,147,547 | 2,863,277,201 | 2,484,147,547 |
| Capital surplus | 4(26) | 1,095,339,421 | 1,306,381,765 | 1,240,166,735 | 1,451,209,079 |
| Less: Treasury shares | 4(27) | (277,180,983) | (417,349,879) | (277,180,983) | (417,349,879) |
| Other comprehensive income | 4(28) | 5,080,234 | 1,948,943 | - | - |
| Special reserve | 4(29) | 6,068,600 | 3,224,938 | - | - |
| Surplus reserve | 4(30) | 924,305,375 | 920,592,332 | 938,850,735 | 935,137,692 |
| Undistributed profits | 4(31) | 4,486,264,723 | 4,159,642,227 | 440,114,948 | 529,327,954 |
| Total equity attributable to shareholders of parent company | 9,103,154,571 | 8,458,587,873 | 5,205,228,636 | 4,982,472,393 | |
| Minority interests | 346,277,891 | 321,035,238 | - | - | |
| Total shareholders' equity | 9,449,432,462 | 8,779,623,111 | 5,205,228,636 | 4,982,472,393 | |
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 19,114,234,184 | 19,535,002,368 | 11,100,914,649 | 10,104,402,316 |
The accompanying notes form an integral part of these financial statements.
Legal representative: Chen Lin Principal in charge of accounting: Wang Jian Head of accounting department:Wang Wenxin
CSG HOLDING CO., LTD.CONSOLIDATED AND COMPANY’S INCOME STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
| 2018 | 2017 | 2018 | 2017 | ||
| Item | Note | Consolidated | Consolidated | Company | Company |
| Revenue | 4(32) | 10,609,963,011 | 10,879,400,746 | 58,900,937 | 58,687,566 |
| Less: Cost of sales | 4(32) | (8,120,481,894) | (8,216,358,372) | - | - |
| Taxes and surcharges | 4(33) | (140,424,851) | (124,523,926) | (516,457) | (4,942,397) |
| Selling and distribution expenses | 4(34) | (354,983,459) | (336,131,723) | - | - |
| General and administrative expenses | 4(35) | (731,215,251) | (588,652,397) | (177,600,771) | (117,287,822) |
| Research and development expenses | 4(36) | (338,791,891) | (330,677,375) | (7,601) | (6,779) |
| Financial expenses - net | 4(37) | (349,403,487) | (315,961,080) | (76,503,819) | (42,124,252) |
| Including: interest expenses | (401,627,067) | (314,603,596) | (131,665,668) | (53,413,267) | |
| interest income | 61,857,535 | 12,606,285 | 57,796,521 | 11,043,439 | |
| Asset impairment loss | 4(39) | (136,546,150) | (69,399,755) | (22,950) | (80,219) |
| Investment income/(loss) | 4(40) /17(5) | - | 427,636 | 231,537,607 | 436,068,825 |
| Income on disposal assets | 4(41) | (454,368) | (1,768,993) | 2,440 | - |
| Other Income | 4(42) | 94,618,039 | 84,341,814 | 2,049,664 | 1,568,240 |
| Operating profit | 532,279,699 | 980,696,575 | 37,839,050 | 331,883,162 | |
| Add: Non-operating revenue | 4(43) | 13,858,651 | 20,763,042 | 134,006 | 40,000 |
| Less: Non-operating expenses | 4(44) | (1,541,471) | (5,152,591) | (243,265) | (3,426,562) |
| Total profit | 544,596,879 | 996,307,026 | 37,729,791 | 328,496,600 | |
| Less: Income tax (expenses)/revenue | 4(45) | (72,388,291) | (167,670,991) | (599,358) | (7,655,575) |
| Net profit | 472,208,588 | 828,636,035 | 37,130,433 | 320,841,025 | |
| Classified by continuous operation: | |||||
| Net income from continuing operations (“-” for net loss) | 472,208,588 | 828,636,035 | 37,130,433 | 320,841,025 | |
| Net income from discontinued operations (“-” for net loss) | - | - | - | - | |
| Classified by equity ownership: | |||||
| Attributable to shareholders of parent company | 452,965,935 | 825,388,312 | - | - | |
| Minority interests | 19,242,653 | 3,247,723 | - | - | |
| Other comprehensive income net after tax | 3,131,291 | (2,705,028) | - | - | |
| Other comprehensive income net after tax attributable to shareholders of parent company | 3,131,291 | (2,705,028) | - | - | |
| Other comprehensive income items which will be reclassified subsequently to profit or loss | 3,131,291 | (2,705,028) | - | - | |
| Differences on translation of foreign currency financial statements | 3,131,291 | (2,705,028) | - | - | |
| Other comprehensive income net after tax attributable to minority interests | - | - | - | - | |
| Total comprehensive income | 4(28) | 475,339,879 | 825,931,007 | 37,130,433 | 320,841,025 |
| Total comprehensive income attributable to shareholders of parent company | 456,097,226 | 822,683,284 | |||
| Total comprehensive income attributable to minority interests | 19,242,653 | 3,247,723 | |||
| Earnings per share | 4(46) | ||||
| Basic earnings per share (RMB Yuan) | 4(46) | 0.16 | 0.30 | ||
| Diluted earnings per share (RMB Yuan) | 4(46) | 0.16 | 0.29 |
The accompanying notes form an integral part of these financial statements.
Legal representative: Chen Lin Principal in charge of accounting: Wang Jian Head of accounting department: Wang Wenxin
CSG HOLDING CO., LTD.CONSOLIDATED AND COMPANY’S CASH FLOW STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
| 2018 | 2017 | 2018 | 2017 | ||
| Item | Note | Consolidated | Consolidated | Company | Company |
| 1. Cash flows from operating activities | |||||
| Cash received from sales of goods or rendering of services | 11,788,692,400 | 12,159,560,836 | 61,224,074 | 84,336,551 | |
| Refund of taxes and surcharges | 82,340,672 | 24,706,337 | - | - | |
| Cash received relating to other operating activities | 4(47)(a) | 215,823,594 | 72,348,567 | 62,104,734 | 16,104,051 |
| Sub-total of cash inflows | 12,086,856,666 | 12,256,615,740 | 123,328,808 | 100,440,602 | |
| Cash paid for goods and services | (7,251,436,467) | (7,206,584,779) | - | (65,853) | |
| Cash paid to and on behalf of employees | (1,316,396,954) | (1,204,981,471) | (96,333,808) | (61,388,549) | |
| Payments of taxes and surcharges | (784,858,705) | (795,627,245) | (3,313,177) | (17,355,536) | |
| Cash paid relating to other operating activities | 4(47)(b) | (603,786,440) | (585,976,089) | (31,902,035) | (26,421,920) |
| Sub-total of cash outflows | (9,956,478,566) | (9,793,169,584) | (131,549,020) | (105,231,858) | |
| Net cash flows from/(used in) operating activities | 2,130,378,100 | 2,463,446,156 | (8,220,212) | (4,791,256) | |
| 2. Cash flows from investing activities | |||||
| Cash received from returns on investments | - | - | 231,537,607 | 436,068,825 | |
| Net cash received from disposal of fixed assets, intangible assets and other long-term assets | 4,272,239 | 4,370,785 | 2,440 | - | |
| Cash received relating to other investing activities | 4(47)(c) | 31,055,318 | 187,756,255 | - | 5,966,582 |
| Sub-total of cash inflows | 35,327,557 | 192,127,040 | 231,540,047 | 442,035,407 | |
| Cash paid to acquire fixed assets, intangible assets and other long-term assets | (695,872,456) | (1,212,172,338) | (6,675,786) | (3,996,610) | |
| Cash paid to acquire investments | - | - | (72,000,000) | - | |
| Cash paid relating to other investing activities | 4(47)(d) | (118,263,080) | (200,085,036) | (45,168) | (284,975) |
| Sub-total of cash outflows | (814,135,536) | (1,412,257,374) | (78,720,954) | (4,281,585) | |
| Net cash flows (used in)/from investing activities | (778,807,979) | (1,220,130,334) | 152,819,093 | 437,753,822 | |
| 3. Cash flows from financing activities | |||||
| Cash received from capital contributions | 36,161,814 | 417,349,879 | 36,161,814 | 417,349,879 | |
| Including: Cash received from capital contributions by minority shareholders of subsidiaries | - | - | - | - | |
| Cash received from borrowings | 4,636,519,062 | 4,096,568,050 | 3,340,000,000 | 2,750,693,638 | |
| Cash received relating to other financing activities | 4(47)(e) | - | 3,616,000,000 | 44,696,063 | 2,700,067,157 |
| Sub-total of cash inflows | 4,672,680,876 | 8,129,917,929 | 3,420,857,877 | 5,868,110,674 | |
| Cash repayments of borrowings | (4,737,952,772) | (5,154,107,768) | (3,320,000,000) | (4,646,723,365) | |
| Cash payments for interest expenses and distribution of dividends or profits | (503,060,429) | (558,404,559) | (225,366,612) | (275,981,816) | |
| Including: Cash payments for dividends to minority shareholders of subsidiaries | - | (2,488,500) | - | - | |
| Cash payments relating to other financing activities | 4(47)(f) | (1,020,125,951) | (1,783,109,674) | - | - |
| Sub-total of cash outflows | (6,261,139,152) | (7,495,622,001) | (3,545,366,612) | (4,922,705,181) | |
| Net cash flows (used in)/from financing activities | (1,588,458,276) | 634,295,928 | (124,508,735) | 945,405,493 | |
| 4. Effect of foreign exchange rate changes on cash | 2,261,903 | (2,425,575) | (1,248,202) | 666,398 | |
| 5. Net increase/(decrease) in cash and cash equivalents | 4(48)(b) | (234,626,252) | 1,875,186,175 | 18,841,944 | 1,379,034,457 |
| Add: Cash and cash equivalents at beginning of year | 2,459,753,165 | 584,566,990 | 1,680,672,390 | 301,637,933 | |
| 6. Cash and cash equivalents at end of year | 4(48)(c) | 2,225,126,913 | 2,459,753,165 | 1,699,514,334 | 1,680,672,390 |
The accompanying notes form an integral part of these financial statements.
Legal representative: Chen Lin Principal in charge of accounting: Wang Jian Head of accounting department: Wang Wenxin
CSG HOLDING CO., LTD.CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITYFOR THE YEAR ENDED 31 DECEMBER 2018
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
| Attributable to shareholders of parent company | |||||||||||||
| Item | Share capital | Capital surplus | Less: Treasury share | Other comprehensive income | Special reserve | Surplus reserve | Undistributed profits | Sub-total | Minority interests | Total shareholders' equity | |||
| Note | 4(25) | 4(26) | 4(27) | 4(28) | 4(29) | 4(30) | 4(31) | ||||||
| Balance at 1 January 2017 | 2,075,335,560 | 1,260,702,197 | - | 4,653,971 | 5,843,473 | 888,508,230 | 3,573,871,573 | 7,808,915,004 | 320,276,015 | 8,129,191,019 | |||
| Movements for the year ended 31 December 2017 | |||||||||||||
| Total comprehensive income | |||||||||||||
| Net profit | - | - | - | - | - | - | 825,388,312 | 825,388,312 | 3,247,723 | 828,636,035 | |||
| Other comprehensive income | 4(28) | - | - | - | (2,705,028) | - | - | - | (2,705,028) | - | (2,705,028) | ||
| Total comprehensive income | - | - | - | (2,705,028) | - | - | 825,388,312 | 822,683,284 | 3,247,723 | 825,931,007 | |||
| Capital contribution and withdrawal by shareholders | 97,511,654 | 356,979,901 | (417,349,879) | - | - | - | - | 37,141,676 | - | 37,141,676 | |||
| Share-based payments | 97,511,654 | 328,032,920 | (417,349,879) | - | - | - | - | 8,194,695 | - | 8,194,695 | |||
| Shareholders’ Interest-free borrowing | - | 28,946,981 | - | - | - | - | - | 28,946,981 | - | 28,946,981 | |||
| Profit distribution | - | - | - | - | - | 32,084,102 | (239,617,658) | (207,533,556) | (2,488,500) | (210,022,056) | |||
| Appropriation to surplus reserve | 4(30) | - | - | - | - | - | 32,084,102 | (32,084,102) | - | - | - | ||
| Distribution to the shareholders | 4(31) | - | - | - | - | - | - | (207,533,556) | (207,533,556) | (2,488,500) | (210,022,056) | ||
| Special reserve | - | - | - | - | (2,618,535) | - | - | (2,618,535) | - | (2,618,535) | |||
| Special reserve appropriate | 4(29) | - | - | - | - | 7,831,127 | - | - | 7,831,127 | - | 7,831,127 | ||
| Special reserve used | 4(29) | - | - | - | - | (10,449,662) | - | - | (10,449,662) | - | (10,449,662) | ||
| Internal transfer of shareholders' equity | 311,300,333 | (311,300,333) | - | - | - | - | - | - | - | - | |||
| Capital reserve to share capital | 311,300,333 | (311,300,333) | - | - | - | - | - | - | - | - | |||
| Balance at 31 December 2017 | 2,484,147,547 | 1,306,381,765 | (417,349,879) | 1,948,943 | 3,224,938 | 920,592,332 | 4,159,642,227 | 8,458,587,873 | 321,035,238 | 8,779,623,111 | |||
| 98 |
CSG HOLDING CO., LTD.CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (CONT’D)FOR THE YEAR ENDED 31 DECEMBER 2018
| Attributable to shareholders of parent company | |||||||||||
| Item | Share capital | Capital surplus | Less: Treasury share | Other comprehensive income | Special reserve | Surplus reserve | Undistributed profits | Sub-total | Minority interests | Total shareholders' equity | |
| Note | 4(25) | 4(26) | 4(27) | 4(28) | 4(29) | 4(30) | 4(31) | ||||
| Balance at 1 January 2018 | 2,484,147,547 | 1,306,381,765 | (417,349,879) | 1,948,943 | 3,224,938 | 920,592,332 | 4,159,642,227 | 8,458,587,873 | 321,035,238 | 8,779,623,111 | |
| Movements for the year ended 31 December 2018 | |||||||||||
| Total comprehensive income | |||||||||||
| Net profit | - | - | - | - | - | - | 452,965,935 | 452,965,935 | 19,242,653 | 472,208,588 | |
| Other comprehensive income | 4(28) | - | - | - | 3,131,291 | - | - | - | 3,131,291 | - | 3,131,291 |
| Total comprehensive income | - | - | - | 3,131,291 | - | - | 452,965,935 | 456,097,226 | 19,242,653 | 475,339,879 | |
| Capital increase or decrease from shareholder | 6,507,523 | 161,579,787 | 140,168,896 | - | - | - | - | 308,256,206 | 6,000,000 | 314,256,206 | |
| Minority shareholders invest capital | - | - | - | - | - | - | - | - | 6,000,000 | 6,000,000 | |
| Share-based payments | 6,507,523 | 161,579,787 | 140,168,896 | - | - | - | - | 308,256,206 | - | 308,256,206 | |
| Profit distribution | - | - | - | - | - | 3,713,043 | (126,343,439) | (122,630,396) | - | (122,630,396) | |
| Appropriation to surplus reserve | 4(30) | - | - | - | - | - | 3,713,043 | (3,713,043) | - | - | - |
| Distribution to the shareholders | 4(31) | - | - | - | - | - | - | (122,630,396) | (122,630,396) | - | (122,630,396) |
| Special reserve | - | - | - | - | 2,843,662 | - | - | 2,843,662 | - | 2,843,662 | |
| Special reserve appropriate | 4(29) | - | - | - | - | 8,319,885 | - | - | 8,319,885 | - | 8,319,885 |
| Special reserve used | 4(29) | - | - | - | - | (5,476,223) | - | - | (5,476,223) | - | (5,476,223) |
| Internal transfer of shareholders' equity | 372,622,131 | (372,622,131) | - | - | - | - | - | - | - | - | |
| Capital reserve to share capital | 372,622,131 | (372,622,131) | - | - | - | - | - | - | - | - | |
| Balance at 31 December 2018 | 2,863,277,201 | 1,095,339,421 | (277,180,983) | 5,080,234 | 6,068,600 | 924,305,375 | 4,486,264,723 | 9,103,154,571 | 346,277,891 | 9,449,432,462 | |
The accompanying notes form an integral part of these financial statements.
Legal representative: Chen Lin Principal in charge of accounting: Wang Jian Head of accounting department: Wang Wenxin
CSG HOLDING CO., LTD.
COMPANY'S STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITYFOR THE YEAR ENDED 31 DECEMBER 2018
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
| Attributable to shareholders of parent compan | |||||||
| Item | Share capital | Capital surplus | Less: Treasury share | Surplus reserve | Undistributed profits | Total shareholders' equity | |
| Balance at 1 January 2017 | 2,075,335,560 | 1,405,529,511 | - | 903,053,590 | 448,104,587 | 4,832,023,248 | |
| Movements for the year ended 31 December 2017 | |||||||
| Total comprehensive income | |||||||
| Net profit | - | - | - | - | 320,841,025 | 320,841,025 | |
| Total comprehensive income | - | - | - | - | 320,841,025 | 320,841,025 | |
| Capital increase or decrease from shareholder | 97,511,654 | 356,979,901 | (417,349,879) | - | - | 37,141,676 | |
| Share-based payments | 97,511,654 | 328,032,920 | (417,349,879) | - | - | 8,194,695 | |
| Shareholders’ Interest-free borrowing | - | 28,946,981 | - | - | - | 28,946,981 | |
| Profit distribution | - | - | - | 32,084,102 | (239,617,658) | (207,533,556) | |
| Appropriation to surplus reserve | - | - | - | 32,084,102 | (32,084,102) | - | |
| Distribution to the shareholders | - | - | - | - | (207,533,556) | (207,533,556) | |
| Capital reserve to share capital | 311,300,333 | (311,300,333) | - | - | - | - | |
| Balance at 31 December 2017 | 2,484,147,547 | 1,451,209,079 | (417,349,879) | 935,137,692 | 529,327,954 | 4,982,472,393 | |
| Balance at 1 January 2018 | 2,484,147,547 | 1,451,209,079 | (417,349,879) | 935,137,692 | 529,327,954 | 4,982,472,393 | |
| Movements for the year ended 31 December 2018 | |||||||
| Total comprehensive income | |||||||
| Net profit | - | - | - | - | 37,130,433 | 37,130,433 | |
| Total comprehensive income | - | - | - | - | 37,130,433 | 37,130,433 | |
| Capital increase or decrease from shareholder | 6,507,523 | 161,579,787 | 140,168,896 | - | - | 308,256,206 | |
| Share-based payments | 6,507,523 | 161,579,787 | 140,168,896 | - | - | 308,256,206 | |
| Profit distribution | - | - | - | 3,713,043 | (126,343,439) | (122,630,396) | |
| Appropriation to surplus reserve | - | - | - | 3,713,043 | (3,713,043) | - | |
| Distribution to the shareholders | - | - | - | - | (122,630,396) | (122,630,396) | |
| Capital reserve to share capital | 372,622,131 | (372,622,131) | - | - | - | - | |
| Balance at 31 December 2018 | 2,863,277,201 | 1,240,166,735 | (277,180,983) | 938,850,735 | 440,114,948 | 5,205,228,636 | |
The accompanying notes form an integral part of these financial statements.
Legal representative: Chen Lin Principal in charge of accounting: Wang Jian Head of accounting department: Wang Wenxin
1 General information
CSG Holding Co., LTD (the “Company”) was incorporated in September 1984, known as China South Glass Company, as a jointventure enterprise by Hong Kong China Merchants Shipping Co., LTD (香港招商局轮船股份有限公司), Shenzhen BuildingMaterials Industry Corporation (深圳建筑材料工业集团公司), China North Industries Corporation (中国北方工业深圳公司) andGuangdong International Trust and Investment Corporation (广东国际信托投资公司). The Company was registered in Shenzhen,Guangdong Province of the People's Republic of China and its headquarters is located in Shenzhen, Guangdong Province of thePeople's Republic of China. The Company issued RMB-denominated ordinary shares (“A-share”) and foreign shares (“B-share”)publicly in October 1991 and January 1992 respectively, and was listed on Shenzhen Stock Exchange on February 1992. As at 31December 2018, the registered capital was RMB2,863,277,201, with nominal value of RMB1 per share.
The Company and its subsidiaries (collectively referred to as the “Group”) are mainly engaged in the manufacture and sales of flatglass, specialized glass, engineering glass, energy saving glass, silicon related materials, polycrystalline silicon and solar componentsand electronic-grade display device glass and the construction and operation of photovoltaic plant etc.
Details on the majors subsidiaries included in the consolidated scope in current year were stated in Note 6(1).
The financial statements were authorized for issue by the Board of Directors on 16 April 2019.
2 Summary of significant accounting policies and accounting estimates
The Group determines its specific accounting policies and estimates according to manufacturing and operation feature. It mainlyreflected in provision for bad debts of receivables (Note 2(10)), inventory costing method (Note 2(11)), amortization of Property,plant and equipment and intangible assets (Note 2(13) and (16)), criteria for determining capitalized development expenditure (Note2(16)), and timing for revenue recognition (Note 2(24)).
Please see Note 2(30) for the key judgments adopted by the Group in applying important accounting policies.
(1) Basis of preparation
The financial statements are prepared in accordance with the Accounting Standards for Business Enterprises - Basic Standard, andthe specific accounting standards and other relevant regulations issued by the Ministry of Finance on 15 February 2006 and insubsequent periods (hereafter collectively referred to as “the Accounting Standard for Business Enterprises” or “CAS”), andInformation Disclosure Rule No. 15 for Companies with Public Traded Securities - Financial Reporting General Provision issued byChina Security Regulatory Commission.
As at 31 December 2018, the Group current liabilities exceed current assets about RMB1.267 billion and committed capitalexpenditure of about RMB 0.131 billion (Note 11(1)). The directors of the Company has assessed the following facts and conditions:
a) the Group has been able to generate positive operating cash flows in prior years and expect to do so in the next 12 months, and in2018, the net cash inflow from operation activities is approximately RMB 2.13 billion; b) the Group has maintained goodrelationship with banks, so the Group has been able to successfully renew the bank facilities upon the expiry. As at 31 December2018, the Group had unutilized banking facilities of approximately RMB7.054billion, among which long-term banking facilities wereabout RMB0.357 billion. In addition, the shareholder of the Group or other appointed related parties are willing to provide the Groupwith RMB2.00 billion interest-free loan. As at report date, the shareholder of Group has provided RMB 2 billion interest-free loan.The Group also has other sources of financing, such asissuing short-term bonds, ultra-short-term financing bonds and medium-term notes. The directors are of view that the bankingfacilities and shareholder’s support above can meet the funding requirements of the Group’s debt servicing and capital commitment.Accordingly, the directors of the Company had adopted the going concern basis in the preparation of the financial statements of theCompany and the Group.
(2) Statement of compliance with the Accounting Standards for Business Enterprises
The financial statements of the Company for the year ended 31 December 2018 are in compliance with the Accounting Standards forBusiness Enterprises, and truly and completely present the financial position of the consolidated and the Company as at 31 December2018 and their financial performance, cash flows and other information for the year then ended.
(3) Accounting year
The Company’s accounting year starts on 1 January and ends on 31 December.
(4) Recording currency
The recording currency is Renminbi (RMB).The economic environment of subsidiaries (China Southern Glass(Hong Kong) Limited,Hong Kong Southern Glass Trading co., Limited) determines their recording currency is Hongkong dollar. This report ‘s recordingcurrency is Renminbi (RMB).
(5) Business combinations
(a) Business combinations involving enterprises under common control
The consideration paid and net assets obtained by the absorbing party in a business combination are measured at book value. Thedifference between book value of the net assets obtained from the combination and book value of the consideration paid for thecombination is treated as an adjustment to capital surplus (share premium). If the capital surplus (share premium) is not sufficient toabsorb the difference, the remaining balance is adjusted against retained earnings. Costs directly attributable to the combination areincluded in profit or loss in the period in which they are incurred. Transaction costs associated with the issue of equity or debtsecurities for the business combination are included in the initially recognised amounts of the equity or debt securities.
(b) Business combinations involving enterprises not under common control
The cost of combination and identifiable net assets obtained by the acquirer in a business combination are measured at fair value atthe acquisition date. Where the cost of the combination exceeds the acquirer’s interest in the fair value of the acquiree’s identifiablenet assets, the difference is recognized as goodwill; where the cost of combination is lower than the acquirer’s interest in the fairvalue of the acquiree’s identifiable net assets, the difference is recognized in profit or loss for the current period. Costs directlyattributable to the combination are included in profit or loss in the period in which they are incurred. Transaction costs associatedwith the issue of equity or debt securities for the business combination are included in the initially recognized amounts of the equityor debt securities.
(6) Preparation of consolidated financial statements
The consolidated financial statements comprise the financial statements of the Company and all of its subsidiaries.
Subsidiaries are consolidated from the date on which the Group obtains control and are de-consolidated from the date that suchcontrol ceases. For a subsidiary that is acquired in a business combination involving enterprises under common control, it is includedin the consolidated financial statements from the date when it, together with the Company, comes under common control of theultimate controlling party. The portion of the net profits realized before the combination date is presented separately in theconsolidated income statement.
In preparing the consolidated financial statements, where the accounting policies and the accounting periods of the Company andsubsidiaries are inconsistent, the financial statements of the subsidiaries are adjusted in accordance with the accounting policies andthe accounting period of the Company. For subsidiaries acquired from business combinations involving enterprises not undercommon control, the individual financial statements of the subsidiaries are adjusted based on the fair value of the identifiable netassets at the acquisition date.
All significant intra-group balances, transactions and unrealized profits are eliminated in the consolidated financial statements. Theportion of subsidiaries’ equity and the portion of a subsidiaries’ net profits and losses and comprehensive incomes for the period notattributable to Company are recognized as minority interests and presented separately in the consolidated financial statements underequity, net profits and total comprehensive income respectively. Unrealized profits and losses resulting from the sales of assets by theCompany to its subsidiaries are fully eliminated against net profit attributable to shareholders of the parent company. Unrealizedprofits and losses resulting from the sales of assets by a subsidiary to the Company are eliminated and allocated between net profitattributable to shareholders of the parent company and non-controlling interests in accordance with the allocation proportion of theparent company in the subsidiary. Unrealized profits and losses resulting from the sales of assets by one subsidiary to another areeliminated and allocated between net profit attributable to shareholders of the parent company and non-controlling interests inaccordance with the allocation proportion of the parent in the subsidiary.
After the control over the subsidiary has been gained, whole or partial minority equities of the subsidiary owned by minorityshareholders are acquired from the subsidiary’s minority shareholders. In the consolidated financial statements, the subsidiary's assetsand liabilities are reflected with amount based on continuous calculation starting from the acquisition date or consolidation date.Capital surplus is adjusted according to the difference between newly increased long-term equity investment arising from acquisitionof minority equity and the share of net assets calculated based on current shareholding ratio that the parent company is entitled to.The share is subject to continuous calculation starting from the acquisition date or consolidation date. If the capital surplus (capitalpremium or share capital premium) is not sufficient to absorb the difference, the remaining balance is adjusted against retainedearnings.
If the accounting treatment of a transaction which considers the Group as an accounting entity is different from that considers theCompany or its subsidiaries as an accounting entity, it is adjusted from the perspective of the Group.
(7) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, deposits that can be readily drawn on demand, and short-term and highly liquidinvestments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
(8) Foreign currency transaction
(a) Foreign currency transaction
Foreign currency transactions are translated into RMB using the exchange rates prevailing at the dates of the transactions. At thebalance sheet date, monetary items denominated in foreign currencies are translated into RMB using the spot exchange rates on thebalance sheet date. Exchange differences arising from these translations are recognized in profit or loss for the current period, exceptfor those attributable to foreign currency borrowings that have been taken out specifically for the acquisition or construction ofqualifying assets, which are capitalized as part of the cost of those assets. Non-monetary items denominated in foreign currencies thatare measured at historical costs are translated at the balance sheet date using the spot exchange rates at the date of the transactions.The effect of exchange rate changes on cash is presented separately in the cash flow statement.
(b) Translation of foreign currency financial statements
The asset and liability items in the balance sheets for overseas operations are translated at the spot exchange rates on the balancesheet date. Among the shareholders’ equity items, the items other than “undistributed profits” are translated at the spot exchange ratesof the transaction dates. The income and expense items in the income statements of overseas operations are translated at the spotexchange rates of the transaction dates. The differences arising from the above translation are presented separately in theshareholders’ equity. The cash flows of overseas operations are translated at the spot exchange rates on the dates of the cash flows.The effect of exchange rate changes on cash is presented separately in the cash flow statement.
(9) Financial instrument
(a) Financial assets
(i) Classification of financial assets
Financial assets are classified into the following categories at initial recognition: financial assets at fair value through profit or loss,receivables, available-for-sale financial assets and held-to-maturity investments. The classification of financial assets depends on theGroup’s intention and ability to hold the financial assets. The Group had no financial assets at fair value through profit or loss andheld-to-maturity investments for 2017.
Receivables
Receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.Receivables comprise notes receivable, accounts receivable and other receivables. (Note 2(10))
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are either designated in this category or not classified in anyof the other categories at initial recognition. Available-for-sale financial assets are included in other current assets on the balancesheet if management intends to dispose of them within 12 months after the balance sheet date.
(ii) Recognition and measurement
Financial assets are recognized at fair value on the balance sheet when the Group becomes a party to the contractual provisions of thefinancial instrument. The related transaction costs that are attributable to the acquisition of receivables and available-for-salefinancial assets are included in their initial recognition amounts.
Available-for-sale financial assets are subsequently measured at fair value. Investments in equity instruments are measured at costwhen they do not have a quoted market price in an active market and whose fair value cannot be reliably measured. Receivables aremeasured at amortized cost using the effective interest method.
Gains or losses arising from change in fair value of available-for-sale financial assets are recognized directly in equity, except forimpairment losses and foreign exchange gains and losses arising from translation of monetary financial assets. When such financialassets are derecognized, the cumulative gains or losses previously recognized directly into equity are recycled into profit or loss forthe current period. Interests on available-for-sale investments in debt instruments calculated using the effective interest methodduring the period in which such investments are held and cash dividends declared by the investee on available-for-sale investments inequity instruments are recognized as investment income, which is recognized in profit or loss for the period.
(iii) Impairment of financial assets
The Group assesses book values of financial assets at each balance sheet date. If there is objective evidence that a financial asset isimpaired, an impairment loss is provided for.
The objective evidence of impairment losses on financial assets refers to events that actually incurred after the initial recognition offinancial assets, have influence on the expected future cash flow from the financial assets and the influence can be reliably measured.
Objective evidence which indicates the occurrence of impairment for available-for-sale equity instruments includes significant ornon-temporary decrease of fair value of equity instruments investment. The Group conducts individual Checkion on eachavailable-for-sale equity instruments investment at balance sheet date, if the fair value of the available-for-sale equity instrument isless than its initial investment cost for more than 50% (inclusive) or less than its initial investment cost continually for more than 1year, that means impairment incurred; if the fair value of the available-for-sale equity instrument is less than its initial investmentcost for more than 20% (inclusive) but has not reached 50%, the Group will comprehensively consider other factors such as pricevolatility to determine whether the equity instrument investment has been impaired. The Group calculates the initial investment costof initial available-for-sale equity instruments investment using the weighted average method.
When an impairment loss on a financial asset carried at amortized cost has occurred, the amount of loss is provided for at thedifference between the asset’s carrying amount and the present value of its estimated future cash flows (excluding future credit lossesthat have not been incurred). If there is objective evidence that the value of the financial asset is recovered and the recovery is relatedobjectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed and theamount of reversal is recognized in profit or loss.
If an impairment loss on available-for-sale financial assets measured at fair value is incurred, the cumulative losses arising from thedecline in fair value that had been recognized directly in shareholders' equity are transferred out from equity and into impairment loss.For an investment in debt instrument classified as available-for-sale on which impairment losses have been recognized, if, in asubsequent period, its fair value increases and the increase can be objectively related to an event occurring after the impairment losswas recognized in profit or loss, the previously recognized impairment loss is reversed into profit or loss for the current period. Foran investment in an equity instrument classified as available-for-sale on which impairment losses have been recognized, the increasein its fair value in a subsequent period is recognized directly in equity.
(iv) Derecognition of financial assets
Financial assets are derecognized when: i) the contractual rights to receive the cash flows from the financial assets have expired; or ii)all substantial risks and rewards of ownership of the financial assets have been transferred; or iii) the control over the financial assethas been waived even if the Group does not transfer or retain nearly all of the risks and rewards relating to the ownership of afinancial asset.
On derecognition of a financial asset, the difference between book value and the sum of the consideration received and thecumulative changes in fair value that had been recognized directly in owner's equity, is recognized in profit or loss.
(b) Financial liabilities
Financial liabilities are classified into two categories at initial recognition: financial liabilities at fair value through profit or loss andother financial liabilities. The financial liabilities of the Group mainly comprise other financial liabilities, including payables,borrowings and bonds payable.
The fair value change of financial liabilities at fair value through profit or loss is charged to income statement.
Payables comprise accounts payable, notes payable and other payables, which are recognized initially at fair value and measuredsubsequently at amortized cost using the effective interest method.
Borrowings and bonds payable are recognized initially at fair value, net of transaction costs incurred, and subsequently measured atamortized cost using the effective interest method.
Other financial liabilities within one year (inclusive) is presented as current liabilities, while non-current financial liabilities due withone year (inclusive) is reclassified as non-current liabilities due within one year. Others are presented as non-current liabilities.
A financial liability (or a part of a financial liability) is derecognized when all or part of the obligation is extinguished. The differencebetween book value of a financial liability (or a part of financial liability) extinguished and the consideration paid is recognized in theincome statement.
(c) Determination of fair value of financial instruments
The fair value of a financial instrument that is traded in an active market is determined at the quoted price in the active market. Thefair value of a financial instrument that is not traded in an active market is determined by using a valuation technique. Duringvaluation, the Group adopts a valuation technique suitable for current situation, which is supported by sufficient available data andother information, chooses the inputs consistent with the feature of assets or liabilities considered in the transaction thereof withmarket participants, and uses related observable inputs in preference to the greatest extent. Unobservable inputs are used when it isunable to obtain or is infeasible for related observable inputs.
(10) Receivables
Receivables comprise notes receivable, accounts receivable and other receivables. Accounts receivable arising from sales of goods orrendering of services are initially recognized at fair value of the contractual payments from the buyers or service recipients.
(a) Receivables with amounts that are individually significant and subject to separate assessment for provision for bad debts
Receivables with amounts that are individually significant are subject to separate assessment for impairment. If there exists objectiveevidence that the Group will not be able to collect the amount under the original terms, a provision for bad debts of that receivable ismade at the difference between its carrying amount and the present value of its estimated future cash flows.
The basis or amount for individually significant receivables is individually greater than RMB20 million.
(b) Receivables with amounts that are not individually significant but subject to separate assessment for provision for bad debts
If there exists objective evidence that the Group will not be able to collect the amount under the original terms, a provision for baddebts of that receivable is made at the difference between its carrying amount and the present value of its estimated future cash flows.
(c) Receivables that are subject to provision for bad debts on the grouping basis
Receivables with amounts that have not been individually provided for impairment are classified into certain groupings based ontheir credit risk characteristics. The provision for bad debts is determined based on the historical loss experience for the groupings ofreceivables with similar credit risk characteristics, taking into consideration of the current circumstances.
Basis for portfolio is as follows:
| Portfolio 1 | Receivables not impaired after separate assessment |
| Portfolio 2 | Related party portfolio |
The percentage of provision for the portfolio:
| Percentage of provision for accounts receivable | Percentage of provision for other receivables | |
| Portfolio 1 | 2% | 2% |
| Portfolio 2 | 2% | 2% |
(d) The Group transfers receivables which have no recourse right to financial institution, the difference between book values which is
trade amount cut the write-off receivables and related tax expenses charged into the income statement.
(11) Inventories
(a) Classification
Inventories refer to manufacturing sector, including raw materials, work in progress, finished goods and turnover materials, and aremeasured at the lower of cost and net realizable value.
(b) Inventory costing method
Cost is determined using the weighted average method. The cost of finished goods and work in progress comprise raw materials,direct labor and systematically allocated production overhead based on the normal production capacity.
(c) Amortization methods of low value consumables and packaging materials
Turnover materials include low value consumables and packaging materials, which are expensed when issued.
(d) The determination of net realizable value and the method of provision for decline in the value of inventories
Provision for decline in the value of inventories is determined at the excess amount of book values of the inventories over their netrealizable value. Net realizable value is determined based on the estimated selling price in the ordinary course of business, less theestimated costs to completion and estimated costs necessary to make the sale and related taxes.
(e) The Group adopts the perpetual inventory system.
(12) Long-term equity investments
Long-term equity investments comprise the Company’s long-term equity investments in its subsidiaries, and the Group’s long-termequity investments in its associates.
Subsidiaries are the investees over which the Company is able to exercise control. Associates are the investees that the Group hassignificant influence on their financial and operating policies.
Investments in subsidiaries are measured using the cost method in the Company’s financial statements, and adjusted by using theequity method when preparing the consolidated financial statements. Investments in associates are accounted for using the equitymethod.
(a) Initial recognition
For long-term equity investments formed in business combination: when obtained from business combinations involving entitiesunder common control, the long-term equity investment is stated at carrying amount of equity for the combined parties at the time ofmerger; when the long-term equity investment obtained from business combinations involving entities not under common control, theinvestment is measured at combination cost.
For long-term equity investments not formed in business combination: the one paid by cash is initially measured at actual purchaseprice; the long-term investment obtained by issuing equity securities is stated at fair value of equity securities as initial investmentcost..
(b) Subsequent measurement and recognition of related profit or loss
For long-term equity investments accounted for using the cost method, they are measured at the initial investment costs, and cashdividends or profit distribution declared by the investees are recognized as investment income in profit or loss.
For long-term equity investments accounted for using the equity method, where the initial investment cost of a long-term equityinvestment exceeds the Group’s share of the fair value of the investee’s identifiable net assets at the acquisition date, the long-termequity investment is measured at the initial investment cost; where the initial investment cost is less than the Group’s share of the fairvalue of the investee’s identifiable net assets at the acquisition date, the difference is included in profit or loss and the cost of thelong-term equity investment is adjusted upwards accordingly.
Under the equity method, the Group recognizes the investment income according to its share of net profit or loss of the investee. TheGroup discontinues recognizing its share of the net losses of an investee after book values of the long-term equity investment
together with any long-term interests that in substance form part of the investor’s net investment in the investee are reduced to zero.However, if the Group has obligations for additional losses and the criteria with respect to recognition of provisions under theaccounting standards on contingencies are satisfied, the Group continues recognizing the investment losses and the provisions. Forchanges in owners’ equity of the investee other than those arising from its net profit or loss, its proportionate share is directlyrecorded into capital surplus, provided that the proportion of the shareholding of the Group in the investee remains unchanged. Bookvalue of the investment is reduced by the Group’s share of the profit distribution or cash dividends declared by an investee. Theunrealized profits or losses arising from the intra-group transactions amongst the Group and its investees are eliminated in proportionto the Group’s equity interest in the investees, and then based on which the investment gains or losses are recognized. Any lossesresulting from transactions between the Group and its investees attributable to asset impairment losses are not eliminated.
(c) Basis for determining existence of control, jointly control or significant influence over investees
The term "control" refers to the power in the investees, to obtain variable returns by participating in the related business activities ofthe investees, and the ability to affect the returns by exercising its power over the investees.
The term "significant influence" refers to the power to participate in the formulation of financial and operating policies of anenterprise, but not the power to control, or jointly control, the formulation of such policies with other parties.
(d) Impairment of long-term equity investments
Book value of long-term equity investments in subsidiaries and associates is reduced to the recoverable amount when the recoverableamount is less than book value (Note 2(18)).
(13) Fixed assets
(a) Recognition and initial measurement
Fixed assets comprise buildings, machinery and equipment, motor vehicles and others.
Fixed assets are recognized when it is probable that the related economic benefits will probably flow to the Group and the costs canbe reliably measured. Fixed assets purchased or constructed by the Group are initially measured at cost at the acquisition date.
Subsequent expenditures incurred for a fixed asset are included in the cost of the fixed asset when it is probable that the associatedeconomic benefits will flow to the Group and the related cost can be reliably measured. Book value of the replaced part isderecognized. All the other subsequent expenditures are recognized in profit or loss in the period in which they are incurred.
(b) Depreciation methods
Fixed assets are depreciated using the straight-line method to allocate the cost of the assets to their estimated residual values overtheir estimated useful lives. For the fixed assets that have been provided for impairment loss, the related depreciation charge isprospectively determined based upon the adjusted carrying amounts over their remaining useful lives.
The estimated useful lives, the estimated net residual values expressed as a percentage of cost and the annual depreciation rates offixed assets are as follows:
Estimated useful lives Estimated net residual value Annual depreciation rate
Buildings 20 to 35 years 5% 2.71% to 4.75%Machinery and equipment 8 to 20 years 5% 4.75% to 11.88%Motor vehicles and others 5 to 8 years 0% 12.50% to 20.00%
The estimated useful life, the estimated net residual value of a fixed asset and the depreciation method applied to the asset arereviewed, and adjusted as appropriate at each year-end.
(c) Book value of a fixed asset is reduced to the recoverable amount when the recoverable amount is below book value (Note 2 (18)).
(d) Disposal
A fixed asset is derecognized on disposal or when no future economic benefits are expected from its use or disposal. The amount of
proceeds from disposals on sale, transfer, retirement or damage of a fixed asset net of its carrying amount and related taxes andexpenses is recognized in profit or loss for the current period.
(14) Construction in progress
Construction in progress is recorded at actual cost. Actual cost comprises construction cost, installation cost, borrowing costs eligiblefor capitalized condition and necessary expenditures incurred for its intended use. Actual cost also includes net of trial productioncost and trial production income before construction in progress is put into production.
Construction in progress is transferred to fixed assets when the assets are ready for their intended use, and depreciation begins fromthe following month.
Book value of construction in progress is reduced to the recoverable amount when the recoverable amount is below book value (Note2 (18)).
(15) Borrowing costs
The borrowing costs that are directly attributable to the acquisition and construction of an asset that needs a substantially long periodof time for its intended use commence to be capitalized and recorded as part of the cost of the asset when expenditures for the assetand borrowing costs have been incurred, and the activities relating to the acquisition and construction that are necessary to preparethe asset for its intended use have commenced. The capitalization of borrowing costs ceases when the asset under acquisition orconstruction becomes ready for its intended use and the borrowing costs incurred thereafter are recognized in profit or loss for thecurrent period. Capitalization of borrowing costs is suspended during periods in which the acquisition or construction of a fixed assetis interrupted abnormally and the interruption lasts for more than 3 months, until the acquisition or construction is resumed.
For the specific borrowings obtained for the acquisition or construction of an asset qualifying for capitalization, the amount ofborrowing costs eligible for capitalization is determined by deducting any interest income earned from depositing the unused specificborrowings in the banks or any investment income arising on the temporary investment of those borrowings during the capitalizationperiod.
For the general borrowings obtained for the acquisition or construction of an asset qualifying for capitalization, the amount ofborrowing costs eligible for capitalization is determined by applying the weighted average effective interest rate of generalborrowings, to the weighted average of the excess amount of cumulative expenditures on the asset over the amount of specificborrowings. The effective interest rate is the rate at which the estimated future cash flows during the period of expected duration ofthe borrowings or applicable shorter period are discounted to the initial amount of the borrowings.
(16) Intangible assets
Intangible assets, mainly including land use rights, patents and proprietary technologies, exploitation rights and others, are measuredat cost.
(a) Land use rights
Land use rights are amortized on the straight-line basis over their approved use period of 30 to 70 years. If the acquisition costs of theland use rights and the buildings located thereon cannot be reasonably allocated between the land use rights and the buildings, all ofthe acquisition costs are recognized as fixed assets.
(b) Patents and proprietary technologies
Patents are amortized on a straight-line basis over the estimated use life.
(c) Exploitation rights
Exploitation rights are amortized on a straight-line basis over permitted exploitation periods on the exploitation certificate.
(d) Periodical review of useful life and amortization method
For an intangible asset with a finite useful life, review of its useful life and amortization method is performed at each year-end, withadjustment made as appropriate.
(e) Research and development
The expenditure on an internal research and development project is classified into expenditure on the research phase and expenditureon the development phase based on its nature and whether there is material uncertainty that the research and development activitiescan form an intangible asset at end of the project.
Expenditure on the research phase related to planned survey, evaluation and selection for research on manufacturing technique isrecognized in profit or loss in the period in which it is incurred. Prior to mass production, expenditure on the development phaserelated to the design and testing phase in regards to the final application of manufacturing technique is capitalized only if all of thefollowing conditions are satisfied:
? The development of manufacturing technique has been fully demonstrated by technical team;? The management has approved the budget for the development of manufacturing technique;? There are research and analysis of pre-market research explaining that products manufactured with such technique are capable
of marketing;? There is sufficient technical and capital to support the development of manufacturing technique and subsequent mass
production; and the expenditure on manufacturing technique development can be reliably gathered.
Other development expenditures that do not meet the conditions above are recognized in profit or loss in the period in which they areincurred. Development costs previously recognized as expenses are not recognized as an asset in a subsequent period. Capitalizedexpenditure on the development phase is presented as development costs in the balance sheet and transferred to intangible assets atthe date that the asset is ready for its intended use.
(f) Impairment of intangible assets
Book value of intangible assets is reduced to the recoverable amount when the recoverable amount is below book value (Note 2(18)).
(17) Long-term prepaid expenses
Long-term prepaid expenses include the expenditures that have been incurred but should be recognized as expenses over more thanone year in the current and subsequent periods. Long-term prepaid expenses are amortized on the straight-line basis over the expectedbeneficial period and are presented at actual expenditure net of accumulated amortization.
(18) Impairment of long-term assets
Fixed assets, construction in progress, intangible assets with finite useful lives and long-term equity investments in joint ventures andassociates are tested for impairment if there is any indication that the assets may be impaired at the balance sheet date; intangibleassets not ready for their intended use are tested at least annually for impairment, irrespective of whether there is any indication thatthey may be impaired. If the result of the impairment test indicates that the recoverable amount of an asset is less than its carryingamount, a provision for impairment and an impairment loss are recognized for the amount by which the asset’s carrying amountexceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and the present valueof the future cash flows expected to be derived from the asset. Provision for asset impairment is determined and recognized on theindividual asset basis. If it is not possible to estimate the recoverable amount of an individual asset, the recoverable amount of agroup of assets to which the asset belongs is determined. A group of assets is the smallest group of assets that is able to generateindependent cash inflows.
Goodwill that is separately presented in the financial statements is tested at least annually for impairment, irrespective of whetherthere is any indication that it may be impaired. In conducting the test, book value of goodwill is allocated to the related asset groupsor groups of asset groups which are expected to benefit from the synergies of the business combination. If the result of the testindicates that the recoverable amount of an asset group or group of asset groups, including the allocated goodwill, is lower than itscarrying amount, the corresponding impairment loss is recognized. The impairment loss is first deducted from book value ofgoodwill that is allocated to the asset group or group of asset groups, and then deducted from book values of other assets within theasset groups or groups of asset groups in proportion to book values of assets other than goodwill.
Once the above asset impairment loss is recognized, it will not be reversed for the value recovered in the subsequent periods.
(19) Employee benefits
Employee benefits include short-term employee benefits, post-employment benefits, termination benefits and other long-termemployee benefits provided in various forms of consideration in exchange for service rendered by employees or compensations forthe termination of employment relationship.
(a) Short-term employee benefits
Short-term employee benefits include wages or salaries, bonuses, allowances and subsidies, staff welfare, medical care, work injuryinsurance, maternity insurance, housing funds, labor union funds, employee education funds and paid short-term leave, etc. Theemployee benefit liabilities are recognized in the accounting period in which the service is rendered by the employees, with acorresponding charge to the profit or loss for the current period or the cost of relevant assets. Employee benefits which arenon-monetary benefits shall be measured at fair value.
(b) Post-employment benefits
The Group classifies post-employment benefit plans as either defined contribution plans or defined benefit plans. Definedcontribution plans are post-employment benefit plans under which the Group pays fixed contributions into a separate fund and willhave no obligation to pay further contributions; and defined benefit plans are post-employment benefit plans other than definedcontribution plans. During the reporting period, the Group's post-employment benefits mainly include basic pensions andunemployment insurance, both of which belong to the defined contribution plans.
Basic pensions
The Group’s employees participate in the basic pension plan set up and administered by local authorities of Ministry of HumanResource and Social Security. Monthly payments of premiums on the basic pensions are calculated according to prescribed bases andpercentage by the relevant local authorities. When employees retire, local labor and social security institutions have a duty to pay thebasic pension insurance to them. The amounts based on the above calculations are recognized as liabilities in the accounting period inwhich the service has been rendered by the employees, with a corresponding charge to the profit or loss for the current period or thecost of relevant assets.
(c) Termination benefits
The Group provides compensation for terminating the employment relationship with employees before the end of the employmentcontracts or as an offer to encourage employees to accept voluntary redundancy before the end of the employment contracts. TheGroup recognizes a liability arising from compensation for termination of the employment relationship with employees, with acorresponding charge to profit or loss at the earlier of the following dates: 1) when the Group cannot unilaterally withdraw the offerof termination benefits because of an employment termination plan or a curtailment proposal; 2) when the Group recognizes costs orexpenses related to the restructuring that involves the payment of termination benefits.
The termination benefits expected to be paid within one year since the balance sheet date are classified as current liabilities.
(20) Dividend distribution
Cash dividend is recognized as a liability for the period in which the dividend is approved by the shareholders’ meeting.
(21) Deferred tax assets and deferred tax liabilities
Deferred tax assets and deferred tax liabilities are calculated and recognized based on the differences arising between the tax bases ofassets and liabilities and their carrying amounts (temporary differences). Deferred tax asset is recognized for the deductible lossesthat can be carried forward to subsequent years for deduction of the taxable profit in accordance with the tax laws. No deferred taxliability is recognized for a temporary difference arising from the initial recognition of goodwill. No deferred tax asset or deferred taxliability is recognized for the temporary differences resulting from the initial recognition of assets or liabilities due to a transactionother than a business combination, which affects neither accounting profit nor taxable profit (or deductible loss). At the balance sheetdate, deferred tax assets and deferred tax liabilities are measured at the tax rates that are expected to apply to the period when theasset is realized or the liability is settled.
Deferred tax assets are only recognized for deductible temporary differences, deductible losses and tax credits to the extent that it isprobable that taxable profit will be available in the future against which the deductible temporary differences, deductible losses andtax credits can be utilized.
Deferred tax liabilities are recognized for temporary differences arising from investments in subsidiaries and associates, except wherethe Group is able to control the timing of reversal of the temporary difference, and it is probable that the temporary difference willnot reverse in the foreseeable future. When it is probable that the temporary differences arising from investments in subsidiaries andassociates will be reversed in the foreseeable future and that the taxable profit will be available in the future against which thetemporary differences can be utilized, the corresponding deferred tax assets are recognized.
Deferred tax assets and liabilities are offset when:
? The deferred taxes are related to the same tax payer within the Group and the same taxation authority; and,? That tax payer within the Group has a legally enforceable right to offset current tax assets against current tax liabilities.
(22) Provisions
Business restructuring, provisions for product warranties, loss contracts etc. are recognized when the Group has a present obligation,it is probable that an outflow of economic benefits will be required to settle the obligation, and the amount of the obligation can bemeasured reliably.
A provision is initially measured at the best estimate of the expenditure required to settle the related present obligation. Factorssurrounding a contingency, such as the risks, uncertainties and the time value of money, are taken into account as a whole in reachingthe best estimate of a provision. Where the effect of the time value of money is material, the best estimate is determined bydiscounting the related future cash outflows. The increase in the discounted amount of the provision arising from passage of time isrecognized as interest expense.
Book value of provision is reviewed at each balance sheet date and adjusted to reflect the current best estimate.
The provisions expected to be paid within one year since the balance sheet date are classified as current liabilities.
(23) Share-based payments
Share-based payments are divided into equity-settled and cash-settled payments. The term "equity-settled share-based payment"refers to a transaction in which an enterprise grants shares or other equity instruments as a consideration in return for services.
Equity-settled share-based payment The Group‘s stock option stock option plan is the equity-settled share-based payment inexchange of employees' services and is measured at the fair value of the equity instruments at grant date. The equity instruments areexercisable after services in vesting period are completed or specified performance conditions are met. In the vesting period, theservices obtained in current period are included in relevant cost and expenses at the fair value of the equity instruments at grant datebased on the best estimate of the number of exercisable equity instruments, and capital surplus is increased accordingly. If thesubsequent information indicates the number of exercisable equity instruments differs from the previous estimate, an adjustment ismade and, on the exercise date, the estimate is revised to equal the number of actual vested equity instruments. The Group determinesthe fair value of stock option stock options using option pricing model, which is Black-Scholes option pricing model (B-S model).
In the period at which performance conditions and term of service are met, the relevant cost and expenses of equity-settled paymentshould be recognized, and capital surplus is increased accordingly. Before the exercise date, the accruing amounts of equity-settledpayments on balance sheet date reflect the part of expired waiting period and optimal estimation for the number of the Company finalvested equity instruments.
If the non-market conditions and term of service are not met so that share-based payment fail to exercise, the costs and expenses onthis portion should not be recognized. If the share-based payment agreement sets out the market conditions and term of non-vesting,as long as performance conditions and term of service are met, it is should be regard as exercisable right, no matter the marketconditions and non-vesting conditions are meet or not.
If the terms of equity-settled payment are modified, at least the service is confirmed in accordance with the unmodified terms. Inaddition, the increase of the fair value of the authorized equity instruments, or the beneficial changes to the employees on themodification date, the increase of service is confirmed.
If the equity-settled payment is cancelled, the cancellation date shall be deemed as an expedited exercise, and the unconfirmedamount shall be confirmed immediately. If the employee or other party is able to choose to meet the non-vesting conditions but not
satisfied in the waiting period, equity-settled payment should be cancelled. But if a new equity instrument is granted, and the new
equity instrument is confirm to replace the old equity instrument which is canceled in the authorization date of the new equityinstrument, the new equity instrument should be disposed by using the same conditions and terms of the old equity instrument formodifications
(24) Revenue recognition
The amount of revenue is determined in accordance with the fair value of the consideration received or receivable for the sales ofgoods and services in the ordinary course of the Group’s activities. Revenue is shown net of discounts, rebates and returns.
Revenue is recognized when the economic benefits associated with the transaction will probably flow to the Group, the relatedrevenue can be reliably measured, and the specific revenue recognition criteria have been met for each type of the Group’s activitiesas described below:
(a) Sales of goods
The Group mainly sells flat and engineering glass, products related to solar energy, and electronic glass and displays. For domesticsales, the Group delivers the products to a certain place specified in the contract. When the buyer takes over the goods, the Grouprecognizes revenue. For export sales, the Group recognizes the revenue when it finished clearing goods for export and deliver thegoods on board the vessel, or when the goods are delivered to a certain place specified in the contract. For above sales, when thebuyer takes over the goods, the buyer has the right to sell the products, and should bear the risk of price fluctuation or goods damage.
(b) Rendering of services
Revenue is recognized for the rendering of service by the Group to external parties upon the completion of related service.
(c) Transfer of asset use rights
Interest income is recognized on a time-proportion basis using the effective interest method.
(25) Government grants
Government grants are transfers of monetary or non-monetary assets from the government to the Group at nil consideration,including tax refund and financial subsidies, etc.
A government grant is recognized when there is a reasonable assurance that the grants will be received and the Group will complywith all attached conditions. Monetary government grants are measured at the amounts received or receivable. Non-monetarygovernment grant are measured at fair value, if the fair value cannot be reliably obtained, it is measured at nominal amount.
The government grants related to assets refer to government grant obtained by enterprises and used for purchase and construction oflong-term assets or formation of long-term asset in other ways. The government grants related to income refer to grants other thanthose related to assets.
For government grants related to income, where the grant is a compensation for related expenses or losses to be incurred by theGroup in the subsequent periods, the grant is recognized as deferred income, and included in profit or loss over the periods in whichthe related costs are recognized; where the grant is a compensation for related expenses or losses already incurred by the Group, thegrant is recognized immediately in profit or loss for the current period. The company uses the same method of presentation forsimilar government grants.
The ordinary activity government grants should be counted into operating profits; the government grants which not belong ordinaryactivities should be counted into non-operating income.
(26) Leases
A lease that transfers substantially all the risks and rewards incidental to ownership of an asset is a finance lease. An operating leaseis a lease other than a finance lease.
Lease payments under an operating lease are recognized on a straight-line basis over the period of the lease, and are either capitalizedas part of the cost of related assets, or charged as an expense for the current period.
Lease income under an operating lease is recognized as revenue on a straight-line basis over the period of the lease.
(27) Assets classified as held for sale
A non-current asset or a disposal group is classified as held for sale when all of the following conditions are satisfied: (1) thenon-current asset or the disposal group is available for immediate sale in its present condition subject to terms that are traditionallyand customary for sales; (2) the Group has made a resolution and obtained appropriate approval for disposal of the non-current assetor the disposal group, and the transfer is to be completed within one year.
Non-current assets (except for financial assets, investment properties at fair value and deferred tax assets) that meet the recognitioncriteria for held for sale are recognized at the amount equal to the lower of the fair value less costs to sell and book value. Thedifference between fair value less costs to sell and carrying amount should be presented as impairment loss.
Such non-current assets and assets included in disposal groups as classified as held for sale are accounted for as current assets; whileliabilities included in disposal groups classified as held for sale are accounted for as current liabilities, and are presented separately inthe balance sheet.
A discontinued operation is a component of the Group that either has been disposed of or is classified as held for sale, and isseparately identifiable operationally and for financial reporting purposes, and satisfies one of the following conditions: (1) representsa separate major line of business or geographical area of operations; (2) is part of a single coordinated plan to dispose of a separatemajor line of business or geographical area of operations; and (3) is a subsidiary acquired exclusively with a view to resale.
The discontinued operation profits on income statement presentation have included the profits and loss of operation and disposal.
(28) Safety production costs
According to relevant regulations of the Ministry of Finance and National Administration of Work Safety, a subsidiary of the Groupwhich is engaged in producing and selling polysilicon appropriates safety production costs on following basis:
(a) 4% for revenue below RMB10 million (inclusive) of the year;(b) 2% for the revenue between RMB10 million to RMB100 million (inclusive) of the year;(c) 0.5% for the revenue between RMB100 million to RMB1 billion (inclusive) of the year;(d) 0.2% for the revenue above RMB1 billion of the year.
The safety production costs is mainly used for the overhaul, renewal and maintenance of safety facilities. The safety production costsare charged to costs of related products or profit or loss when appropriated, and safety production costs in equity account are creditedcorrespondingly. When using the special reserve, if the expenditures are expenses in nature, the expenses incurred are offset againstthe special reserve directly when incurred. If the expenditures are capital expenditures, when projects are completed and transferredto fixed assets, the special reserve should be offset against the cost of fixed assets, and a corresponding accumulated depreciation arerecognized. The fixed assets are no longer be depreciated in future.
(29) Segment information
The Group identifies operating segments based on the internal organization structure, management requirements and internalreporting system, and discloses segment information of reportable segments which is determined on the basis of operating segments.
An operating segment is a component of the Group that satisfies all of the following conditions: (1) the component is able to earnrevenue and incur expenses from its ordinary activities; (2) whose operating results are regularly reviewed by the Group’smanagement to make decisions about resources to be allocated to the segment and to assess its performance, and (3) for which theinformation on financial position, operating results and cash flows is available to the Group. If two or more operating segments havesimilar economic characteristics and satisfy certain conditions, they are aggregated into one single operating segment.
(30) Critical accounting estimates and judgments
The Group continually Estimates the critical accounting estimates and key assumptions applied based on historical experience andother factors, including expectations of future events that are believed to be reasonable.
The critical accounting estimates and key assumptions that have a significant risk of possibly causing a material adjustment to bookvalues of assets and liabilities within the next accounting year are outlined below:
(a) Income tax
The Group is subject to Income tax in numerous jurisdictions. There are some transactions and events for which the ultimate taxdetermination is uncertain during the ordinary course of business. Significant judgment is required from the Group in determining theprovision for Income tax in each of these jurisdictions. Where the final identified outcome of these tax matters is different from theinitially-recorded amount, such difference will impact the income tax expenses and deferred income tax in the period in which suchdetermination is finally made.
(b) Deferred income tax
Estimates on deferred tax assets are based on estimates on amount of taxable income and applicable tax rate for every year.Realisation of deferred income tax are subject to sufficient taxable income that are possible to be obtained by the Group in the future.Change of the future tax rate as well as the reversed time of temporary difference might have effects on tax expense (income) and thebalance of deferred tax assets or liabilities. Those estimates may also cause significant adjustment on deferred tax.
(c) Impairment of long-term assets (excluding goodwill)
Long-term assets at the balance sheet date should be subject to impairment testing if there are any indications of impairment.Management determines whether the long-term assets impaired or not by evaluating and analyzing following aspects: (1) whether theevent affecting assets impairment occurs; (2) whether the expected obtainable present value of future cash flows is lower than theasset’s carrying amount by continually using the assets or disposal; and (3) whether the assumptions used in expected obtainablepresent value of future cash flows are appropriate.
Various assumptions, including the discount rate and growth rate applied in the method of present value of future cash flow, arerequired in evaluating the recoverable amount of assets. If these assumptions cannot be conformed, the recoverable amount should bemodified, and the long-term assets may be impaired accordingly.
(d) The useful life of fixed assets
Management estimates the useful life of fixed assets, based on historical experiences on using fixed assets that have similarproperties and functions. When there are differences between actually useful life and previously estimation, management will adjustestimation to useful life of fixed assets. The fixed assets would be written off or written down when fixed assets been disposed orbecame redundant. Thus, the estimated result based on existing experience may be different from the actual result of the nextaccounting period, which may cause major adjustment to book value of fixed assets on balance sheet.
(e) Goodwill impairment
Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potentialimpairment. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of thecash-generating units (“CGUs”), or groups of CGUs, and future cash flow from each CGU or CGUs is forecasted and discountedwith appropriate discount rate.
(31) Significant changes in accounting policies
In 2018, the Ministry of Finance issued the Notice of the Ministry of Finance on Revising the Format of 2018 General EnterpriseFinancial Statements (Finance (2018) No.15), and revised the financial statement format of general enterprises accordingly .Theline items of "Notes receivable" and "Accounts receivable" in the balance sheet are listed as "Notes receivable and accountsreceivable"; "Interest receivable " "Dividends receivable" and "Other receivables” are included in "Other receivables"; "Fixed assets"and "Disposal of fixed assets" is included in "Fixed assets"; "Engineering materials” and "Construction in progress" is included in"Construction in progress"; The "Notes Payable" and "Accounts payable" in the balance sheet are listed as "Notes Payable" and"Accounts payable; "Interest payable " "dividend payable” and "Other payables” are included in "Other payables"; "Long-termpayables" and "Special payables" is included in "Long-term payables". In income statement, the original "Administration expenses"is reclassified as "Administration expenses” and "R&D Expenses" separately; The items "Including: interest expenses" and "Interestincome" are added to the financial expenses in the income statement. In the table of changes in owner's equity, the item"Carry-forward retained earnings of the variation of the defined benefit plan" is added. The company adopts the retrospectiveadjustment method for the change of the accounting policy, and the items in 2017 financial statements are retrospectively adjusted asfollows:
| Before adjustment | After adjustment | ||
| Notes receivable | 552,232,420 | Notes receivable and Accounts receivable | 1,190,470,710 |
| Accounts receivable | 638,238,290 | ||
| Other receivables | 205,939,019 | Other receivables | 205,939,019 |
| Interest receivable | - | ||
| Dividends receivable | - | ||
| Fixed assets | 11,540,769,697 | Fixed assets | 11,540,769,697 |
| Disposal of fixed assets | - | ||
| Construction in progress | 1,417,624,618 | Construction in progress | 1,417,624,618 |
| Engineering material | - | ||
| Notes payable | 213,401,622 | Notes payable and Accounts payable | 1,613,567,664 |
| Accounts payable | 1,400,166,042 | ||
| Other payables | 619,324,354 | Other payables | 653,357,094 |
| Interest payable | 34,032,740 | ||
| Dividend payable | - | ||
| Long-term payable | 1,161,794,247 | Long-term prepaid expenses | 1,161,794,247 |
| Special payable | - | ||
| General and administrative expenses | 919,329,772 | General and administrative expenses | 588,652,397 |
| Research and development cost | 330,677,375 |
3 Taxation
(1) The main categories and rates of taxes applicable to the Group are set out below:
| Category | Taxable basis | Tax rate |
| Enterprise income tax | Taxable income | 0% to 25% |
| Value-added tax (“VAT”) (a) | Taxable value-added amount (Tax payable is calculated using the taxable sales amount multiplied by the applicable tax rate less deductible VAT input of the current period) | 6% to 17% |
| City maintenance and construction tax | VAT paid | 1% to 7% |
| Educational surcharge | VAT paid | 3% to 5% |
Some subsidiaries of the Group have used the “exempt, credit, refund” method on goods exported and the refund rate is 5%-17%.
(2) Tax incentives
The main tax incentives the Group is entitled to are as follows:
Tianjin CSG Energy Conservation Glass Co., Ltd. (“Tianjin Energy Conservation”) passed review on a high and new tech enterprisein 2018 and obtained the Certificate of High and New Tech Enterprise, the period of validity is three years. It applies to 15% tax ratefor three years since 2018.
Dongguan CSG Architectural Glass Co., Ltd. (“Dongguan CSG”) passed review on a high and new tech enterprise in 2016 andobtained the Certificate of High and New Tech Enterprise, the period of validity is three years. It applies to 15% tax rate for threeyears since 2016.
Wujiang CSG East China Architectural Glass Co., Ltd. (“Wujiang CSG Engineering”) passed review on a high and new techenterprise in 2017 and obtained the Certificate of High and New Tech Enterprise, the period of validity is three years. It applies to15% tax rate for three years since 2017.
Dongguan CSG Solar Glass Co., Ltd. (“Dongguan CSG Solar”) passed review on a high and new tech enterprise in 2017 andobtained the Certificate of High and New Tech Enterprise, the period of validity is three years. It applies to 15% tax rate for threeyears since 2017.
Yichang CSG polysilicon Co., Ltd. (“Yichang CSG polysilicon”) passed review on a high and new tech enterprise in 2017 andobtained the Certificate of High and New Tech Enterprise, the period of validity is three years. It applies to 15% tax rate for threeyears since 2017.
Dongguan CSG PV-tech Co., Ltd. (“Dongguan CSG PV-tech”) passed review on a high and new tech enterprise in 2016 and obtainedthe Certificate of High and New Tech Enterprise, the period of validity is three years. It applies to 15% tax rate for three years since2016.
Hebei Shichuang Glass Co., Ltd. (“Hebei Shichuang”) passed review on a high and new tech enterprise in 2016 and obtained theCertificate of High and New Tech Enterprise, the period of validity is three years. It applies to 15% tax rate for three years since2016.
Wujiang CSG Glass Co., Ltd. (“Wujiang CSG”) was recognised as a high and new tech enterprise in 2017, and obtained theCertificate of High and New Tech Enterprise, and the period of validity was three years. It applies to 15% tax rate for three yearssince 2017.
Xianning CSG Glass Co Ltd. (“Xianning CSG”) was recognised as a high and new tech enterprise in 2017, and obtained theCertificate of High and New Tech Enterprise, and the period of validity was three years. It applies to 15% tax rate for three years
since 2017.
Xianning CSG Energy-Saving Glass Co., Ltd. (“Xianning CSG Energy-Saving”) was recognised as a high and new tech enterprise in2018, and obtained the Certificate of High and New Tech Enterprise, and the period of validity was three years. It applies to 15% taxrate for three years since 2018.
Yichang CSG Photoelectric Glass Co., Ltd. (“Yichang CSG Photoelectric”) was recognised as a high and new tech enterprise in 2018,and obtained the Certificate of High and New Tech Enterprise, and the period of validity was three years. It applies to 15% tax ratefor three years since 2018.
Yichang CSG Display Co., Ltd (“Yichang CSG Display”) was recognised as a high and new tech enterprise in 2018, and obtained theCertificate of High and New Tech Enterprise, and the period of validity was three years. It applies to 15% tax rate for three yearssince 2018.
Qingyuan CSG New Energy-Saving Materials Co., Ltd. (“Qingyuan CSG Energy-Saving”) was recognised as a high and new techenterprise in 2016, and obtained the Certificate of High and New Tech Enterprise, and the period of validity was three years. Itapplies to 15% tax rate for three years since 2016.
Hebei CSG Glass Co Ltd. (“Hebei CSG”) was recognised as a high and new tech enterprise in 2018, and obtained the Certificate ofHigh and New Tech Enterprise, and the period of validity was three years. It applies to 15% tax rate for three years since 2018.
Shenzhen CSG Applied Technology Co Ltd. (“Shenzhen Technology”) was recognised as a high and new tech enterprise in 2018, andobtained the Certificate of High and New Tech Enterprise, and the period of validity was three years. It applies to 15% tax rate forthree years since 2018.
Sichuan CSG Energy Conservation Glass Co., Ltd. (“Sichuan CSG Energy Conservation”) obtains enterprise income tax preferentialtreatment for Western Development, and temporarily calculates enterprise income tax at a tax rate of 15% for current year.
Chengdu CSG Glass Co., Ltd. (“Chengdu CSG”) obtains enterprise income tax preferential treatment for Western Development, andtemporarily calculates enterprise income tax at a tax rate of 15% for current year.
Qingyuan CSG New Energy Co., Ltd. (“Qingyuan CSG New Energy”), Suzhou CSG PV Energy Co., Ltd. (“Suzhou CSG PVEnergy”), Jiangsu Wujiang CSG New Energy Co., Ltd. (“Wujiang CSG New Energy”), and Yichang CSG New Energy Co., Ltd.(“Yichang CSG New Energy”), Zhangzhou CSG Kibing PV Energy Co., Ltd. (“Zhangzhou CSG”), Heyuan CSG Kibing PV EnergyCo., Ltd. (“Heyuan CSG”), Shaoxing CSG Kibing PV Energy Co., Ltd. (“Shaoxing CSG”) Xinning CSG PV Energy Co.,Ltd.(“Xianning CSG PV Energy”) and Zhanjiang CSG New Energy Co., Ltd. (“Zhanjiang CSG PV Energy””),are publicinfrastructure project specially supported by the state in accordance with the Article 87 in Implementing Regulations of the Law of thePeople's Republic of China on Enterprise Income Tax, and can enjoy the tax preferential policy of “three-year exemptions andthree-year halves”, that is, starting from the tax year when the first revenue from production and operation occurs, the enterpriseincome tax is exempted from the first to the third year, while half of the enterprise income tax is collected for the following threeyears. Qingyuan CSG New Energy, Suzhou CSG PV Energy and Wujiang CSG New Energy started to carry out operations in 2015;The applicable enterprise income tax rate for them is 12.5% for the current year. Yichang CSG New Energy started operation in 2016,Zhangzhou CSG, Heyuan CSG and Shaoxing CSG started operation in 2017. Zhanjiang CSG PV Energy、Xianning CSG PV Energystarted operation in 2018.The applicable enterprise income tax rate for them is 0% for the current year.
In addition, pursuant to the document Fogang Guo Shui Shui Tong [2015] No. 2489, the VAT for photovoltaic power generation ofQingyuan CSG New Energy is subject to the refund upon collection policy.
4 Notes to the consolidated financial statements
(1) Cash at bank and on hand
| 31 December 2018 | 31 December 2017 | ||
| Cash on hand | 9,731 | 36,182 | |
| Cash at bank | 2,225,117,182 | 2,409,716,983 | |
| Other cash balances | 1,320,807 | 52,852,599 | |
| 2,226,447,720 | 2,462,605,764 | ||
| Including: Total overseas deposits | 37,790,337 | 24,049,075 |
Other cash balances include margin deposits for issuing letters of credit and applying loans, amounting to RMB1,320,807 (31December 2017: RMB2,852,599), which is restricted cash.
(2) Notes receivable and Accounts receivable
| 31 December 2018 | 31 December 2017 | ||
| Notes receivable | 719,375,448 | 552,232,420 | |
| Accounts receivable | 592,233,312 | 638,238,290 | |
| 1,311,608,760 | 1,190,470,710 |
1. Notes receivable
| 31 December 2018 | 31 December 2017 | ||
| Trade acceptance notes | 415,194,892 | 329,405,579 | |
| Bank acceptance notes | 304,180,556 | 222,826,841 | |
| 719,375,448 | 552,232,420 |
| (a) | As at 31 December 2018, notes receivable which have been endorsed or discounted by the Group but are not yet due are as follows: | |||
| Derecognized | Not derecognized | |||
| Trade acceptance notes | - | 224,935,914 | ||
| Bank acceptance notes | 1,991,011,932 | - | ||
| 1,991,011,932 | 224,935,914 | |||
2. Accounts receivable
| 31 December 2018 | 31 December 2017 | ||
| Accounts receivable | 611,899,209 | 660,150,357 | |
| Less: Provision for bad debts | (19,665,897) | (21,912,067) | |
| 592,233,312 | 638,238,290 |
(a) The ageing of accounts receivable is analysed as follows:
| 31 December 2018 | 31 December 2017 | ||||
| Within 1 year | 583,789,669 | 639,294,320 | |||
| 1 to 2 years | 15,284,163 | 8,343,672 | |||
| 2 to 3 years | 6,586,079 | 12,512,365 | |||
| Over 3 years | 6,239,298 | - | |||
| 611,899,209 | 660,150,357 | ||||
| As at 31 December 2018, accounts receivable of RMB138,819,578 (31 December 2017: RMB93,961,486) were overdue. But based on analysis on financial positions and credit records of such customers, such receivables were considered recoverable and unimpaired by the Company. Therefore no provision for impairment loss had been made. The overdue ageing of the accounts receivable is analyzed as follows: | |||||
| 31 December 2018 | 31 December 2017 | ||||
| Within 1 year | 127,058,887 | 86,358,511 | |||
| 1 to 2 years | 7,822,324 | 7,448,217 | |||
| 2 to 3 years | 3,938,367 | 154,758 | |||
| 138,819,578 | 93,961,486 | ||||
(b) Accounts receivable are analysed by categories as follows:
| 31 December 2018 | 31 December 2017 | ||||||||||
| Carrying amount | Provision for bad debts | Carrying amount | Provision for bad debts | ||||||||
| Amount | % of total balance | Provision for bad debts | % | Amount | % of total balance | Provision for bad debts | % | ||||
| Provision for bad debts by groupings | |||||||||||
| Portfolio 1 | 598,852,703 | 98% | (11,976,169) | 2% | 636,614,136 | 96% | (12,233,039) | 2% | |||
| With amounts that are not individually significant but that the related provision for bad debts is provided on the individual basis | 13,046,506 | 2% | (7,689,728) | 59% | 23,536,221 | 4% | (9,679,028) | 41% | |||
| 611,899,209 | 100% | (19,665,897) | 3% | 660,150,357 | 100% | (21,912,067) | 3% | ||||
(c) Provision for bad debts provided on grouping basis using the percentage of provision method is analysed as follows:
| 31 December 2018 | 31 December 2017 | ||||||||
| Carrying amount | Provision for bad debts | Carrying amount | Provision for bad debts | ||||||
| Amount | Amount | % | Amount | Amount | % | ||||
| Portfolio 1 | 598,852,703 | (11,976,169) | 2% | 636,614,136 | (12,233,039) | 2% | |||
| 598,852,703 | (11,976,169) | 2% | 636,614,136 | (12,233,039) | 2% | ||||
(d) As at 31 December 2018, the Company had no accounts receivable with amounts that were individually significant and that the
related provision for bad debts was provided on the individual basis (31 December 2017: Nil).
(e) As at 31 December 2018, accounts receivable of RMB13,046,506 (31 December 2017: RMB23,536,221) were not individually
significant but provided for bad debts separately. It mainly represented the goods receivable due from a client of the subsidiary,Yichang CSG Display. Due to the client’s bankruptcy, Yichang CSG Display made full provision against this receivable. It alsorepresented the goods receivable due from a client of the subsidiary, Dongguan CSG PV-tech. Due to business dispute, DongguanCSG PV-tech made partial provision against the receivable.
(f) Accounts receivables of RMB 2,750,772 were written off this year, The reasons for the written-off included disputes with
customers and ability to reach a settlement with creditors.
(g) As at 31 December 2018, Total balances for the five largest accounts receivable set out as below:
| Balance | Provision for bad debts | Percentage in total accounts receivable balance | |||
| Total balances for the five largest accounts receivable | 82,666,183 | (1,653,324) | 14% |
(3) Advances to suppliers
(a) The ageing of prepayment is analysed below:
| 31 December 2018 | 31 December 2017 | ||||||
| Amount | % of total balance | Amount | % of total balance | ||||
| Within 1 year | 76,372,805 | 84% | 130,813,397 | 91% | |||
| 1 to 2 years | 2,034,196 | 2% | 264,952 | - | |||
| 2 to 3 years | - | - | 12,769,674 | 9% | |||
| Over 3 years | 12,769,674 | 14% | - | - | |||
| 91,176,675 | 100% | 143,848,023 | 100% | ||||
As at 31 December 2018, advances to suppliers over 1 year with a carrying amount of RMB14,803,870 (31 December 2017:
RMB13,034,626) were mainly advances paid for Natural gas and materials, which were not fully settled since the materials had notbeen received.
(b) As at 31 December 2018, the five largest prepayment are analyzed as follows:
| Balance | Percentage in total advances to suppliers balance | ||
| Total balances for the five largest advances to suppliers | 48,332,569 | 53% |
(4) Other receivables
| 31 December 2018 | 31 December 2017 | ||
| Receivables from special fund for talent | 171,000,000 | 171,000,000 | |
| Refundable deposits | 21,351,937 | 16,957,562 | |
| Payments made on behalf of other parties | 15,036,194 | 19,306,658 | |
| Petty cash | 489,912 | 875,714 | |
| Export tax rebates receivable | 137,744 | - | |
| Others | 3,962,723 | 2,319,489 | |
| 211,978,510 | 210,459,423 | ||
| Less: Provision for bad debts | (4,554,215) | (4,520,404) | |
| 207,424,295 | 205,939,019 |
(a) The ageing of other receivables is analyzed as follows:
| 31 December 2018 | 31 December 2017 | |||
| Within 1 year | 11,684,072 | 22,924,535 | ||
| 1 to 2 years | 14,639,759 | 2,813,012 | ||
| 2 to 3 years | 1,060,654 | 11,211,511 | ||
| 3 to 4 years | 11,121,084 | 171,855,888 | ||
| 4 to 5 years | 171,843,311 | 86,395 | ||
| Over 5 years | 1,629,630 | 1,568,082 | ||
| 211,978,510 | 210,459,423 | |||
| As at 31 December 2018, other receivables of RMB13,594,025 (31 December 2017: RMB2,510,365) were overdue. But based on analysis on financial positions and credit records of such customers, such receivables were considered recoverable and unimpaired by the Company. Therefore no provision for impairment loss had been made. | ||||
(b) Other receivables are analysed by categories as follows:
| 31 December 2018 | 31 December 2017 | ||||||||||
| Carrying amount | Provision for bad debts | Carrying amount | Provision for bad debts | ||||||||
| Amount | % of total balance | Provision for bad debts | % | Amount | % of total balance | Provision for bad debts | % | ||||
| Provision for bad debts by groupings | |||||||||||
| Portfolio 1 | 211,655,605 | 100% | (4,231,310) | 2% | 39,136,518 | 19% | (777,499) | 2% | |||
| Portfolio 2 | - | - | - | - | 171,000,000 | 81% | (3,420,000) | 2% | |||
| Not individually significant but provided for bad debts separately | 322,905 | - | (322,905) | 100% | 322,905 | - | (322,905) | 100% | |||
| 211,978,510 | 100% | (4,554,215) | 2% | 210,459,423 | 100% | (4,520,404) | 2% | ||||
(c) The reason why not individually significant but provided for bad debts separately is the payment is not recoverable
over 5 years.
(d) For other receivables provided for bad debts by portfolio, the percentage of provision for the portfolio is as follows:
| 31 December 2018 | 31 December 2017 | ||||||||
| Carrying amount | Provision for bad debts | Carrying amount | Provision for bad debts | ||||||
| Amount | Amount | % | Amount | Amount | % | ||||
| Portfolio 1 | 211,655,605 | (4,231,310) | 2% | 39,136,518 | (777,499) | 2% | |||
| Portfolio 2 | - | - | 171,000,000 | (3,420,000) | 2% | ||||
| 211,655,605 | (4,231,310) | 2% | 210,136,518 | (4,197,499) | 2% | ||||
(e) As at 31 December 2018, the top 5 largest other receivables are analysed as bellow:
| Nature of business | Balance | Ageing | Percentage in total other receivables balance | Provision for bad debts | ||
| Company A | Independent third party | 171,000,000 | 4 to5Years | 81% | 3,420,000 | |
| Governmental department B | Independent third party | 11,067,754 | 3 to4Years | 5% | 221,355 | |
| Company C | Independent third party | 5,000,000 | 1 to 2 years | 2% | 100,000 | |
| Company D | Independent third party | 3,859,460 | Within 1 year | 2% | 77,189 | |
| Company E | Independent third party | 3,350,000 | 1 to 2 years | 2% | 67,000 | |
| 194,277,214 | 92% | 3,885,544 | ||||
(5) Inventories
(a) Inventories are summarized by categories as follows:
| 31 December 2018 | 31 December 2017 | ||||||||||
| Carrying amount | Provision for decline in the value of inventories | Carrying amount | Carrying amount | Provision for decline in the value of inventories | Carrying amount | ||||||
| Raw materials | 224,107,756 | (1,438,767) | 222,668,989 | 213,348,012 | (1,447,590) | 211,900,422 | |||||
| Work in progress | 25,088,903 | - | 25,088,903 | 45,614,905 | - | 45,614,905 | |||||
| Finished goods | 309,132,138 | (566,246) | 308,565,892 | 387,489,714 | (68,974) | 387,420,740 | |||||
| Turnover materials | 43,815,966 | - | 43,815,966 | 40,959,250 | - | 40,959,250 | |||||
| 602,144,763 | (2,005,013) | 600,139,750 | 687,411,881 | (1,516,564) | 685,895,317 | ||||||
(b) Provision for decline in the value of inventories are analyzed as follows:
| 31 December 2017 | Increase in current year | Reversal in current year | 31 December 2018 | ||||
| Finished goods | 68,974 | 497,272 | - | 566,246 | |||
| Raw materials | 1,447,590 | - | (8,823) | 1,438,767 | |||
| 1,516,564 | 497,272 | (8,823) | 2,005,013 |
(c) Provision for decline in the value of inventories is as follows:
| Basis for provision for decline in the value of inventories | Reasons of reversal of the decline in the value of inventories | ||
| Finished goods | The amount of carrying amount less net realizable value due to decline in price of products | Sold | |
| Raw materials | The amount of book value less net realizable value due to sluggish or damaged raw materials | Used |
(6) Assets classified as held for sale
| Item | carrying amounts at the end of period | Fair value | Estimated disposal costs | Estimated disposal time | ||||
| Intangible assets | 15,048,314 | 18,390,394 | June of 2019 | |||||
| Construction in progress | 30,935,206 | 37,805,606 | June of 2019 | |||||
| 45,983,520 | 56,196,000 | - |
The subsidiary of the Group, Dongguan CSG PV-tech signed a grant contract of land use right with third party Dongguan ChaoyinTextile Co., LTD. (Dongguan Chaoyin Company) on 17 June 2016. Dongguan CSG PV-tech sells its land use right along with thebuildings on the land to Dongguan Chaoyin Company. Therefore, the construction-in-progress and intangible assets of DongguanCSG PV-tech were transferred to assets held for sale. As at 31 December 2018, the transfer of propery rights had not been finalised.
(7) Other current assets
| 31 December 2018 | 31 December 2017 | ||
| VAT to be offset | 115,329,834 | 181,667,326 | |
| Entrusted loan (i) | 300,000,000 | - | |
| Enterprise income tax prepaid | 21,277,486 | 1,132,508 | |
| VAT input to be recognized | 8,720,129 | 18,048,155 | |
| 445,327,449 | 200,847,989 |
(i)On December 21, 2018, reviewed and approved by the Group's eighth session of the Board of Directors , The group issuedTengchong Yuezhou Water Investment Development Co., Ltd. entrusted Loans RMB 0.3 billion via China Everbright Bankshenzhen(Nanshan) branch . The period of entrusted loan was 3 months and annual interest rate 8.5%
(8) Fixed assets
| Buildings | Machinery and equipment | Motor vehicles and others | Total | ||||
| Cost | |||||||
| 31 December 2017 | 3,999,368,700 | 12,462,823,260 | 208,292,757 | 16,670,484,717 | |||
| Increase in current year | |||||||
| Acquisition | 3,370,397 | 48,694,459 | 11,144,592 | 63,209,448 | |||
| Transfers from construction in progress (Note 4(9)) | 133,371,640 | 1,178,070,597 | 6,488,900 | 1,317,931,137 | |||
| Others | 5,630,152 | 2,636,218 | - | 8,266,370 | |||
| Decrease in current year | |||||||
| Disposal or retirement | - | (15,440,941) | (5,023,202) | (20,464,143) | |||
| Others | (291,848,507) | (2,790,972,405) | (3,640,750) | (3,086,461,662) | |||
| 31 December 2018 | 3,849,892,382 | 10,885,811,188 | 217,262,297 | 14,952,965,867 | |||
| Accumulated depreciation | |||||||
| 31 December 2017 | 751,518,811 | 3,908,894,072 | 188,549,283 | 4,848,962,166 | |||
| Increase in current year | |||||||
| Provision | 125,540,858 | 817,166,294 | 23,228,298 | 965,935,450 | |||
| Decrease in current year | |||||||
| Disposal or retirement | - | (2,736,162) | (4,792,845) | (7,529,007) | |||
| Others | (61,216,903) | (832,213,509) | (3,494,074) | (896,924,486) | |||
| 31 December 2018 | 815,842,766 | 3,891,110,695 | 203,490,662 | 4,910,444,123 | |||
| Provision for impairment loss | |||||||
| 31 December 2017 | 10,580,861 | 270,171,993 | - | 280,752,854 | |||
| Increase in current year |
| Provision | 11,270,855 | 1,103,115 | - | 12,373,970 | |||
| Others | 19,876,460 | - | 19,876,460 | ||||
| Decrease in current year | |||||||
| Disposal or retirement | - | (11,214,371) | - | (11,214,371) | |||
| Others | - | (190,110,944) | - | (190,110,944) | |||
| 31 December 2018 | 21,851,716 | 89,826,253 | - | 111,677,969 | |||
| Carrying amount | |||||||
| 31 December 2018 | 3,012,197,900 | 6,904,874,240 | 13,771,635 | 9,930,843,775 | |||
| 31 December 2017 | 3,237,269,028 | 8,283,757,195 | 19,743,474 | 11,540,769,697 |
In 2018, the depreciation amount provided for fixed assets was RMB965,935,450 (2017: RMB980,581,921), and the amount ofdepreciation expenses charged to cost of sales, selling and distribution expenses, general and administrative expenses andconstruction in progress was RMB902,224,539, RMB 973,181, RMB 62,737,730 and RMB 0 (2017：RMB 890,575,701, RMB970,739, RMB 65,929,139 and RMB 23,106,342) respectively.
In 2018, the cost of fixed assets transferred from construction in progress amounted to RMB 1,317,931,137 (2017:RMB1,438,870,858).
(a) Fixed assets with pending certificates of ownership
| Carrying amount | Reasons for not yet obtaining certificates of title | |
| Buildings | 874,593,679 | Have submitted the required documents and are in the process of application, or the related land use right certificate pending |
(9) Construction in progress
| 31 December 2018 | 31 December 2017 | ||||||
| Carrying amount | Provision for impairment loss | Carrying amount | Carrying amount | Provision for impairment loss | Carrying amount | ||
| Yichang CSG polysilicon tech-innovation project | 1,465,710,819 | (253,983,876) | 1,211,726,943 | - | - | - | |
| Yichang CSG polysilicon Wafer production capacity and tech-upgrade project | 707,199,477 | (25,475,004) | 681,724,473 | - | - | - | |
| Yichang display device company flat panel display project | 354,190,988 | (14,160,474) | 340,030,514 | 298,794,622 | (14,160,474) | 284,634,148 | |
| Dongguan Solar Glass Phase I and II improvement project | 78,970,995 | (40,248,018) | 38,722,977 | 78,970,995 | (40,248,018) | 38,722,977 | |
| Yichang 1GW silicon slice project | 48,859,613 | - | 48,859,613 | 43,617,802 | - | 43,617,802 | |
| Dongguan Solar New PV Tech Glass Processing Project | 41,074,003 | 41,074,003 | 1,888,363 | - | 1,888,363 | ||
| LED Sapphire Substrate Project | 32,420,412 | (32,420,412) | - | 30,886,629 | (19,303,853) | 11,582,776 | |
| Hebei CSG Environmental reforming project | 19,012,500 | - | 19,012,500 | - | - | - | |
| Chendu float Environmental reforming project | 16,989,203 | - | 16,989,203 | - | - | - | |
| Wujiang float Environmental reforming project | 16,494,538 | - | 16,494,538 | - | - | - | |
| Dongguan Jingyu Jadeglass Project | 14,273,358 | - | 14,273,358 | - | - | - | |
| Qingyuan CSG Ultra-white electronic glass and ultra-white special glass production line project | 338,679 | - | 338,679 | - | - | - | |
| Xianning CSG Photoelectric Glass project | - | - | - | 400,665,493 | - | 400,665,493 | |
| Yichang Optoelectronic Technology Reform Project | - | - | - | 242,055,237 | - | 242,055,237 | |
| Hebei float 600T tech-innovation project | - | - | - | 113,762,853 | - | 113,762,853 | |
| Zhanjiang Photovoltaic 20MV Step-by-step Photovoltaic Power Plant Project | - | - | - | 100,570,104 | - | 100,570,104 | |
| Wujiang energy glass expansion project | - | - | - | 72,600,518 | (19,876,460) | 52,724,058 | |
| Wujiang Photovoltaic Packaging Materials Project | - | - | - | 7,414,854 | - | 7,414,854 | |
| Others | 130,338,624 | (405,983) | 129,932,641 | 120,391,936 | (405,983) | 119,985,953 | |
| 2,925,873,209 | (366,693,767) | 2,559,179,442 | 1,511,619,406 | (93,994,788) | 1,417,624,618 |
(a) Movement of significant project
| Project name | Budget | 31 December 2017 | Increase in current year | Transfer to fixed assets in current year | Other decreases in current year | 31 December 2018 | Proportion between engineering input and budget (i) | Amount of borrowing costs capitalised in 2018 | Including: Amount of borrowing costs capitalised in 2018 | Capitalisation rate for in current year | Source of fund |
| Yichang CSG polysilicon tech-innovation project | 49,520,000 | - | 1,465,710,819 | - | - | 1,465,710,819 | 19% | - | - | - | Internal fund and bank loan |
| Yichang CSG polysilicon Wafer production capacity and tech-upgrade project | 144,570,000 | - | 707,199,477 | - | - | 707,199,477 | 4% | 30,138 | 30,138 | 5.28% | Internal fund and bank loan |
| Yichang display device company flat panel display project | 1,970,000,000 | 298,794,622 | 55,910,329 | (513,963) | - | 354,190,988 | 86% | 8,543,752 | 4,399,593 | 4.06% | Internal fund and bank loan |
| Dongguan Solar Glass Phase I and II improvement project | 396,410,000 | 78,970,995 | - | - | - | 78,970,995 | 80% | - | - | - | Internal fund |
| Yichang 1GW silicon slice project | 1,073,209,600 | 43,617,802 | 9,506,541 | (4,264,730) | - | 48,859,613 | 44% | 11,713,945 | 3,083,952 | 5.28% | Internal fund and bank loan |
| Dongguan Solar New PV Tech Glass Processing Project | 60,000,000 | 1,888,363 | 55,105,795 | (15,920,155) | - | 41,074,003 | 95% | - | - | - | Internal fund |
| LED Sapphire Substrate Project | 35,000,000 | 30,886,629 | 1,533,783 | - | - | 32,420,412 | 93% | 4,650,543 | - | - | Internal fund and bank loan |
| Hebei CSG Environmental reforming project | 25,700,000 | - | 19,012,500 | - | - | 19,012,500 | 74% | - | - | - | Internal fundn |
| Chendu float Environmental reforming project | 25,000,000 | - | 16,989,203 | - | - | 16,989,203 | 68% | - | - | - | Internal fund |
| Wujiang float Environmental reforming project | 50,300,000 | - | 16,494,538 | - | - | 16,494,538 | 33% | - | - | - | Internal fund |
| Dongguan Jingyu Jadeglass Project | 30,000,000 | - | 14,273,358 | - | - | 14,273,358 | 48% | - | - | - | Internal fund |
| Qingyuan CSG Ultra-white electronic glass and ultra-white special glass production line project | 785,000,000 | - | 338,679 | - | - | 338,679 | - | - | - | - | Internal fund and bank loan |
| Project name | Budget | 31 December 2017 | Increase in current year | Transfer to fixed assets in current year | Other decreases in current year | 31 December 2018 | Proportion between engineering input and budget (i) | Amount of borrowing costs capitalised in 2018 | Including: Amount of borrowing costs capitalised in 2018 | Capitalisation rate for in current year | Source of fund |
| Xianning CSG Photoelectric Glass project | 510,000,000 | 400,665,493 | 93,175,330 | (493,840,823) | - | - | 100% | 20,466,317 | 12,695,704 | 4.75% | Internal fund and bank loan |
| Yichang Optoelectronic Technology Reform Project | 258,296,536 | 242,055,237 | 7,999,369 | (250,054,606) | - | - | 100% | - | - | - | Internal fund and bank loan |
| Hebei float 600T tech-innovation project | 145,750,000 | 113,762,853 | 124,052,098 | (234,744,769) | (3,070,182) | - | 100% | 1,830,487 | 1,830,487 | 4.94% | Internal fund and bank loan |
| Zhanjiang Photovoltaic 20MV Step-by-step Photovoltaic Power Plant Project | 133,000,000 | 100,570,104 | - | (97,484,158) | (3,085,946) | - | 99% | 2,280,097 | - | - | Internal fund and bank loan |
| Wujiang energy glass expansion project | 845,630,000 | 72,600,518 | 2,197,579 | (74,798,097) | - | - | 100% | 20,120,444 | - | - | Internal fund and bank loan |
| Wujiang Photovoltaic Packaging Materials Project | 520,100,000 | 7,414,854 | 22,445,450 | (29,860,304) | - | - | 100% | - | - | - | Internal fund and bank loan |
| Others | 1,185,132,635 | 120,391,936 | 127,596,221 | (116,449,532 ) | (1,200,001) | 130,338,624 | 32,839,290 | 96,251 | - | Internal fund and bank loan | |
| 8,242,618,771 | 1,511,619,406 | 2,739,541,069 | (1,317,931,137) | (7,356,129) | 2,925,873,209 | 102,475,013 | 22,136,125 |
(i) The proportion of project expenditure incurred to the budget is determined by the accumulative expenditures incurred divided by the total budget. Some of the projects are
transferred to property, plant, and equipment because the construction is completed.
(ii) The budget and actual expenditures incurred for these kinds of projects include cost of acquiring land use rights. The balance of construction in progress does not include the costs
of acquiring land-use rights.
(b) Provision for impairment of construction in progress
| Project name | 31 December 2017 | provision increased in current year | provision from long-term assets transferred in current year | Decrease in current year | 31 December 2018 |
| Dongguan Solar Glass Phase I and II improvement project | 40,248,018 | - | - | - | 40,248,018 |
| Wujiang float glass project | 19,876,460 | - | - | (19,876,460) | - |
| Yichang CSG Display panel display project | 14,160,474 | - | - | - | 14,160,474 |
| LED Sapphire Substrate Project | 19,303,853 | 13,116,559 | - | - | 32,420,412 |
| Yichang CSG polysilicon Wafer production capacity and tech-upgrade project(i) | - | 20,537,934 | 4,937,070 | - | 25,475,004 |
| Yichang CSG polysilicon tech-innovation project(i) | - | 68,810,002 | 185,173,874 | - | 253,983,876 |
| Others | 405,983 | - | - | - | 405,983 |
| 93,994,788 | 102,464,495 | 190,110,944 | (19,876,460) | 366,693,767 |
(i)On 31 may 2018, the state introduced the ‘Circular of matters concerning Photovoltaic Power Generation in 2018’, The policiesmentioned above considerably affected the operations of CSG’s solar industry, by the‘section 8 of accounting standards for businessenterprises– impairments of assets’, the management of the company identified and ran impairment tests for some parts of relatedassets showing a sign of impairment, and the provision for impairment was noted by company.
(10) Intangible assets and development expenditure
| Land use rights | Patents and proprietary technologies | Exploitation rights | Others | Total | |
| Cost | |||||
| 31 December 2017 | 1,026,603,700 | 246,011,919 | 4,456,536 | 36,106,710 | 1,313,178,865 |
| Acquisition in current year | - | 1,440,455 | - | 1,900,706 | 3,341,161 |
| Transfers from development expenditure in current year | - | 29,735,459 | - | - | 29,735,459 |
| Others | - | 6,000,000 | - | - | 6,000,000 |
| 31 December 2018 | 1,026,603,700 | 283,187,833 | 4,456,536 | 38,007,416 | 1,352,255,485 |
| Accumulated amortization | |||||
| 31 December 2017 | 149,057,265 | 74,985,236 | 3,706,724 | 24,996,753 | 252,745,978 |
| Provision in current year | 21,184,631 | 22,400,518 | 400,641 | 6,581,913 | 50,567,703 |
| 31 December 2018 | 170,241,896 | 97,385,754 | 4,107,365 | 31,578,666 | 303,313,681 |
| Provision for impairment loss | |||||
| 31 December 2017 | - | 13,201,347 | - | 9,133 | 13,210,480 |
| 31 December 2018 | - | 13,201,347 | - | 9,133 | 13,210,480 |
| Carrying amount | |||||
| 31 December 2018 | 856,361,804 | 172,600,732 | 349,171 | 6,419,617 | 1,035,731,324 |
| 31 December 2017 | 877,546,435 | 157,825,336 | 749,812 | 11,100,824 | 1,047,222,407 |
In 2018, the amortization of intangible assets amounted to RMB50,567,703 (2017: RMB 43,884,166).
As at 31 December 2018, ownership certificates of land use rights (“Land ownership Certificates”) for certain land use rights of theGroup with carrying amounts of approximately RMB5,228,694 (cost: RMB6,586,712) had not yet been obtained by the Group (31December 2017: carrying amount: RMB5,473,442, cost: RMB 6,586,712). The Company’s management are of the view that there isno legal restriction for the Group to apply for and obtain the Land Ownership Certificates and has no adverse effect on the Group’sbusiness operation.
Research expenditure is analyzed below:
| 31 December 2017 | Increase in current year | Decrease in current year | 31 December 2018 | ||||||
| Recognised as expenses | Recognised as intangible assets | ||||||||
| Development costs | 61,365,537 | 42,963,845 | (44,666) | (29,735,459) | 74,549,257 | ||||
In 2018, the total amount of research and development expenditures of the Group was RMB 381,711,070 (2017: RMB 368,237,629),including RMB 338,791,891 (2017: RMB 330,677,375) recorded in income statement for current period and the research anddevelopment expenditure with the amount of RMB 29,735,459 recognized as intangible assets for the current period (2017:
43,122,431). At 31 December 2018, the intangible assets arising from internal research and development accounted for 14.21% oftotal of intangible assets (31 December 2017: 12.37%).
(11) Goodwill
(a) Book value of goodwill
| 31 December 2017 | Increase in current year | Decrease in current year | 31 December 2018 | ||||
| Tianjin CSG Architectural Glass Co., Ltd. | 3,039,946 | 3,039,946 | |||||
| Xianning CSG Photoelectric | 4,857,406 | 4,857,406 | |||||
| Shenzhen CSG Display | 389,494,804 | 389,494,804 | |||||
| 397,392,156 | 397,392,156 |
(b) Provision of impairment of goodwill
| 31 December 2017 | Increase in current year | Decrease in current year | 31 December 2018 | ||||
| Tianjin CSG Architectural Glass Co., Ltd. | |||||||
| Xianning CSG Photoelectric | |||||||
| Shenzhen CSG Display | 20,672,000 | 20,672,000 | |||||
| 20,672,000 | 20,672,000 |
The goodwill allocated to the asset groups and groups of asset groups from Tianjin CSG Architectural was summarized by operatingsegments as Architectural Glass segment. The goodwill allocated to the asset groups and groups of asset groups from Shenzhen CSGDisplay and Xianning CSG Photoelectric are summarized by operating segments as Electronic Glass and Display segment.
Combining with the prediction of the future business and independent third party appraisal institution, the Company's managementconsidered that the goodwill was impaired RMB 20,672,000 as at 31 December 2018.
The recoverable amount of asset groups is determined by net present value of estimated future cash flows which is determinedaccording to the five-year budget approved by management. The cash flow exceed five years is forecasted by using growth rates notexceeding similar long-term average growth rates of each asset group’s industry. The discount rates used are the pre-tax interest ratesthat are able to reflect the risks specific to the related asset groups.
(12) Deferred tax assets and liabilities
(a) Deferred tax assets before offsetting
| 31 December 2018 | 31 December 2017 | |||
| Deductible temporary differences | Deferred tax assets | Deductible temporary differences | Deferred tax assets | |
| Provision for asset impairments | 394,331,591 | 68,458,375 | 361,149,562 | 55,552,592 |
| Tax losses | 407,739,415 | 72,421,592 | 133,658,792 | 24,457,319 |
| Government grants | 256,949,965 | 41,523,325 | 128,189,967 | 20,424,022 |
| Accrued expenses | 42,393,456 | 6,359,019 | 50,193,405 | 7,529,011 |
| Depreciation of fixed assets | 27,973,574 | 4,311,723 | 33,762,174 | 8,000,331 |
| Share payment | 16,366,061 | 2,597,038 | 5,196,945 | 867,677 |
| 1,145,754,062 | 195,671,072 | 712,150,845 | 116,830,952 | |
| Including: | |||||||||
| Expected to be reversed within one year (inclusive) | 54,631,827 | 33,751,219 | |||||||
| Expected to be reversed after one year | 141,039,245 | 83,079,733 | |||||||
| 195,671,072 | 116,830,952 | ||||||||
(b) Deferred tax liabilities before offsetting
| 31 December 2018 | 31 December 2017 | ||||||
| Taxable temporary differences | Deferred tax liabilities | Taxable temporary differences | Deferred tax liabilities | ||||
| Depreciation of fixed assets | 474,157,813 | 78,260,394 | 371,115,284 | 56,874,044 | |||
| Including: | ||||||||
| Expected to be reversed within one year (inclusive) | 23,373,156 | 4,247,230 | ||||||
| Expected to be reversed after one year | 54,887,238 | 52,626,814 | ||||||
| 78,260,394 | 56,874,044 | |||||||
(c) Deductible losses that are not recognized as deferred tax assets of the Group are analyzed as follows:
| 31 December 2018 | 31 December 2017 | ||
| Deductible losses | 517,898,158 | 425,759,321 |
The deductible tax losses not recognized as deferred tax assets mainly represented the tax losses of the Company and some closedsubsidiaries. Management was unable to expect that whether there were taxable profit would be available in the future against whichthese deductible tax losses can be utilized, and accordingly, did not recognize the deferred tax assets.
(d) The tax losses for which no deferred tax assets were recognized will expire in the following years:
| 31 December 2018 | 31 December 2017 | ||
| 2018 | - | 54,100,000 | |
| 2019 | 82,300,000 | 82,300,000 | |
| 2020 | 94,430,197 | 94,430,197 | |
| 2021 | 111,625,585 | 111,625,585 | |
| 2022 | 83,303,539 | 83,303,539 | |
| 2023 | 146,238,837 | - | |
| 517,898,158 | 425,759,321 |
(e) The net balances of deferred tax assets and liabilities after offsetting are as follows:
| 31 December 2018 | 31 December 2017 | ||||||
| Net deferred tax assets or liabilities | Deductible/taxable temporary differences after offsetting | Net deferred tax assets or liabilities | Deductible/taxable temporary differences after offsetting | ||||
| Deferred tax assets | 139,529,518 | 817,628,525 | 80,872,862 | 472,134,707 | |||
| Deferred tax liabilities | 22,118,840 | 146,032,276 | 20,915,954 | 131,099,146 | |||
(13) Other non-current assets
| 31 December 2018 | 31 December 2017 | ||
| Prepayment for equipment and software upgrading expenses | 50,315,934 | 45,431,352 | |
| Prepayment for lease of land use rights | 6,510,000 | 6,510,000 | |
| 56,825,934 | 51,941,352 |
(14) Provision for asset impairment
| 31 December 2017 | Increase in current year | Other Increased in current year | Reversal in current year | Written off in current year | 31 December 2018 | |||
| Provision for bad debts | 26,432,471 | 13,699,656 | - | (13,161,243) | (2,750,772) | 24,220,112 | ||
| Including: Provision for bad debts of accounts receivable | 21,912,067 | 13,421,633 | - | (12,917,031) | (2,750,772) | 19,665,897 | ||
| Provision for bad debts of other receivables | 4,520,404 | 278,023 | - | (244,212) | - | 4,554,215 | ||
| Provision for decline in the value of inventories | 1,516,564 | 497,272 | - | - | (8,823) | 2,005,013 | ||
| Provision for impairment of fixed assets | 280,752,854 | 12,373,970 | 19,876,460 | - | (201,325,315) | 111,677,969 | ||
| Provision for impairment of construction in progress | 93,994,788 | 102,464,495 | 190,110,944 | - | (19,876,460) | 366,693,767 | ||
| Provision for impairment of intangible assets | 13,210,480 | - | - | - | - | 13,210,480 | ||
| Provision for impairment of goodwill | - | 20,672,000 | - | - | - | 20,672,000 | ||
| 415,907,157 | 149,707,393 | 209,987,404 | (13,161,243) | (223,961,370) | 538,479,341 |
(15) Short-term borrowings
| 31 December 2018 | 31 December 2017 | ||
| Unsecured | 2,008,000,000 | 2,691,732,609 | |
| Guaranteed (i) | 909,679,590 | 1,012,898,300 | |
| Mortgage loan | 5,000,000 | - | |
| 2,922,679,590 | 3,704,630,909 |
(i) As at 31 December 2018, the Company provided its subsidiaries with guarantee for the short-term borrowings of
RMB909,679,590 (31 December 2017: RMB1,012,898,300), and the Company had no counter guarantee from minorityshareholders of subsidiaries (31 December 2017: Nil).
As at 31 December 2018, the interest of short-term borrowings varied from 2.95% to 5.66% (31 December 2017: 2.70% to
5.66%).
(16) Notes payable and Accounts payable
| 31 December 2018 | 31 December 2017 | ||
| Notes payable | 105,150,000 | 213,401,622 | |
| Accounts payable | 1,209,859,263 | 1,400,166,042 | |
| 1,315,009,263 | 1,613,567,664 |
1、 Notes payable
| 31 December 2018 | 31 December 2017 | ||
| Bank acceptance notes | 105,150,000 | 213,401,622 |
All notes payable are due within one year.
2、 Accounts payable
| 31 December 2018 | 31 December 2017 | ||
| Materials payable | 749,987,838 | 798,178,206 | |
| Equipment payable | 230,997,567 | 329,926,045 | |
| Construction expenses payable | 133,247,003 | 167,394,038 | |
| Freight payable | 62,455,534 | 61,671,023 | |
| Utilities payable | 27,099,683 | 35,973,405 | |
| Others | 6,071,638 | 7,023,325 | |
| 1,209,859,263 | 1,400,166,042 |
As at 31 December 2018, the amount of accounts payable over 1 year was approximately RMB159,491,611 (31 December 2017:
RMB160,638,075), which mainly comprised payables for construction and equipment. As the construction work had not passed thefinal acceptance test yet, the balance was not yet settled.
(17) Advances from customers
| 31 December 2018 | 31 December 2017 | ||
| Advances for goods from customers | 206,631,008 | 195,563,465 |
The ageing of balances was substantively within 1 year.
(18) Employee benefits payable
| 31 December 2018 | 31 December 2017 | ||
| Short-term employee benefits payable (a) | 262,906,600 | 272,144,440 | |
| Defined contribution plans payable (b) | 54,313 | 26,220 | |
| Termination benefits(c) | 3,498,238 | ||
| 266,459,151 | 272,170,660 |
(a) Short-term employee benefits
| 31 December 2017 | Increase in current year | Decrease in current year | 31 December 2018 | |
| Wages and salaries, bonus, allowances and subsidies | 175,485,615 | 1,207,779,066 | (1,140,700,379) | 242,564,302 |
| Social security contributions | 13,752 | 43,590,775 | (43,579,846) | 24,681 |
| Including: Medical insurance | 12,358 | 36,366,039 | (36,357,092) | 21,305 |
| Work injury insurance | 984 | 4,692,227 | (4,690,854) | 2,357 |
| Maternity insurance | 410 | 2,532,509 | (2,531,900) | 1,019 |
| Housing funds | 2,758,371 | 45,979,653 | (46,124,437) | 2,613,587 |
| Labour union funds and employee education funds | 15,280,702 | 15,807,368 | (13,384,040) | 17,704,030 |
| Management bonus (i) | 78,606,000 | - | (78,606,000) | - |
| Share-based payments | - | 144,278,158 | (144,278,158) | - |
| 272,144,440 | 1,457,435,020 | (1,466,672,860) | 262,906,600 |
(i) Pursuant to the resolution at the 8th session in the temporary conference of the board of directors of the Company on 11 December2017, to implemented equity incentive plans of restricted stock for the Company directors and senior management, core managementteam, backbones of technology and business. The company first awarded 97,511,654 restricted shares to 454 incentive objects for thefirst time at RMB4.28 per share. The total fair value of the equity instruments granted to the incentive object by the company for thefirst time is RMB289,519,900. The total value of such fair value as the total cost of the company's equity incentive plan will beconfirmed in stages according to the ratio of unlocking/exercising in the implementation of the equity incentive plan, and it isincluded in the cost in the term of "management fees and Construction in progress " and "capital reserves - other capitalreserves".
Pursuant to the resolution at the 8th session in the temporary conference of the board of directors of the Company on 13 September2018, The grant date was confirmed on September 13,2018. The company awarded 9,826,580 restricted shares to 75 incentive objectsfor the first time at RMB3.68 per share. The total fair value of the equity instruments granted to the incentive object by the companyis RMB8,256,000. The total value of such fair value as the total cost of the company's equity incentive plan will be confirmed instages according to the ratio of unlocking/exercising in the implementation of the equity incentive plan, and it is includedin the cost in the term of "management fees and Construction in progress " and "capital reserves - other capital reserves".
In addition, according to the Group’s performance in 2018, the unlocking conditions for the second post lock-up period for theordinary A restricted shares incentive plan for 2017 In addition, according to the Group’s performance in 2018, the unlockingconditions for the second post lock-up period for the restricted shares incentive plan for 2017 and for the second post lock-up periodfor the restricted shares incentive plan for 2018 were not met. Therefore, by December 31 2018 ,expenses for the second post lock-upperiod for the ordinary A restricted shares was reduced by RMB 41,856,285.
The Company unlock the conditions of restricted share in 2018, and the cost associated with equity incentive plan is confirmed atRMB144,278,158 in this phase.
(b) Defined contribution plans
| 31 December 2017 | Increase in current year | Decrease in current year | 31 December 2018 | |||
| Basic pensions | 25,388 | 106,923,957 | (106,896,772) | 52,573 | ||
| Unemployment insurance | 832 | 3,774,201 | (3,773,293) | 1,740 | ||
| 26,220 | 110,698,158 | (110,670,065) | 54,313 |
(c) Termination benefits
| 31 December 2017 | Increase in current year | Decrease in current year | 31 December 2018 | |||
| Other dismissal welfare | - | 9,812,341 | (6,314,103) | 3,498,238 | ||
| - | 9,812,341 | (6,314,103) | 3,498,238 |
(19) Taxes payable
| 31 December 2018 | 31 December 2017 | ||
| Enterprise income tax payable | 36,008,341 | 35,100,800 | |
| VAT payable | 54,091,751 | 48,496,225 | |
| Housing property tax payable | 5,156,058 | 8,617,044 | |
| Individual income tax payable | 3,367,389 | 5,177,080 | |
| City maintenance and construction tax payable | 3,246,775 | 4,261,902 | |
| Educational surcharge payable | 2,586,657 | 3,348,566 | |
| Environmental tax payable | 2,350,943 | - | |
| Others | 5,159,451 | 6,995,147 | |
| 111,967,365 | 111,996,764 |
(20) Other payables
| 31 December 2018 | 31 December 2017 | ||
| Interest payable | 73,612,703 | 34,032,740 | |
| Dividend payable | 2,846,362 | - | |
| Other payables | 476,292,122 | 619,324,354 | |
| 552,751,187 | 653,357,094 |
1. Interest payable
| 31 December 2018 | 31 December 2017 | ||
| Interest payable for medium term notes | 65,267,308 | 27,622,465 | |
| Interest of long-term borrowings with periodic payments of interest and return of principal at maturity | 754,878 | 938,950 | |
| Interest payable for short-term borrowings | 7,590,517 | 5,471,325 | |
| 73,612,703 | 34,032,740 |
2. Dividend payable
| 31 December 2018 | 31 December 2017 | ||
| Restricted share dividend payable | 2,846,362 | ||
| 2,846,362 | - |
3. Other payables
| 31 December 2018 | 31 December 2017 | ||
| Guarantee deposits received from construction contractors | 63,181,510 | 49,624,256 | |
| Accrued cost of sales (i) | 37,407,112 | 58,584,562 | |
| Temporary collection of payment for land transfer | 56,106,781 | 56,196,000 | |
| Payable for contracted labor costs | 16,030,100 | 17,568,695 | |
| Temporary receipts | 13,581,459 | 7,964,070 | |
| Deposit for disabled | 4,943,347 | 5,230,110 | |
| Restricted share repurchase obligation | 275,748,309 | 417,349,879 | |
| Others | 9,293,504 | 6,806,782 | |
| 476,292,122 | 619,324,354 |
(i) It represented the payment made to external third parties arising from undertaking the rights of debtor and creditor, comprising
water and electricity, professional service fee and travelling expenses etc.
The ageing of other payables was substantively within 1 year.
(21) Current portion of non-current liabilities
| 31 December 2018 | 31 December 2017 | ||
| Current portion of long-term borrowings | |||
| - Guaranteed | 87,800,000 | 14,880,000 | |
| - Unsecured | - | 180,000,000 | |
| Current portion of finance lease | 731,648,742 | 709,381,397 | |
| 819,448,742 | 904,261,397 |
(22) Long-term borrowings
| 31 December 2018 | 31 December 2017 | ||
| Medium term notes (i) | 2,000,000,000 | 1,200,000,000 | |
| Guaranteed | 315,700,000 | 354,120,000 | |
| 2,315,700,000 | 1,554,120,000 |
(i) Approved by file No. [2015] MTN225 of Inter-bank Market Trading Association, the Company is entitled to issue medium
term notes with the limit of RMB 1,200,000,000, which expires on 28 May 2017.
On 14 July 2015, the Company issued the Phase I medium term notes of RMB1,200,000,000 for 2015, with the maturity dataof 14 July 2020 and annual rate of 4.94%.
Approved by file No. [2018] MTN157 of Inter-bank Market Trading Association, the Company is entitled to issue mediumterm notes with the limit of RMB 800,000,000 which expires on 20 March 2020.
On 14 May 2018, the Company issued the Phase I medium term notes of RMB 800,000,000 for 2018, with the maturity dataof 4 May 2021 and annual rate of 7%.
As at 31 December 2018, the interest of long-term borrowings varied from 4.75% to 7.00% (31 December 2017: 4.75% to5.94%).
(23) Long-term account payable
| 31 December 2018 | 31 December 2017 | ||
| Finance lease | 529,910,796 | 1,161,794,247 |
The Sale and leaseback lease of the group in this phase is a mortgage loan with a lease term of 36 months. On December 31, 2018,the real interest rate of financing lease loans is 4.49%-7.8%.
(24) Deferred income
| 31 December 2018 | 31 December 2017 | ||
| Government grants | 601,825,780 | 562,701,103 |
Government grants are analyzed as follows:
| Government grants | 31 December 2017 | Increase in current year | Other decrease in current year | Non-operating income in current year | 31 December 2018 | Assets/Income related |
| Tianjin CSG Golden Sun Project (i) | 53,717,119 | - | - | (3,374,892) | 50,342,227 | Assets related |
| Dongguan CSG Golden Sun Project (ii) | 43,328,250 | - | - | (2,751,000) | 40,577,250 | Assets related |
| Hebei CSG Golden Sun Project (iii) | 44,000,000 | - | - | (2,750,000) | 41,250,000 | Assets related |
| Xianning CSG Golden Sun Project (iv) | 47,982,917 | - | - | (3,030,500) | 44,952,417 | Assets related |
| Infrastructure compensation for Wujiang CSG Glass Co., Ltd (v) | 39,628,898 | - | - | (4,041,538) | 35,587,360 | Assets related |
| Qingyuan Energy-saving project (vi) | 20,789,167 | - | - | (2,470,000) | 18,319,167 | Assets related |
| Yichang polysilicon products project (vii) | 21,796,875 | - | - | (2,812,500) | 18,984,375 | Assets related |
| Yichang CSG polysilicon slice auxiliary project (viii) | 12,662,876 | 571,590 | (2,384,700) | (1,235,755) | 9,614,011 | Assets related |
| Sichuan energy-saving glass project (ix) | 10,475,460 | - | - | (1,654,020) | 8,821,440 | Assets related |
| Group coating film experimental project (x) | 7,526,280 | - | - | (1,883,760) | 5,642,520 | Assets related |
| Yichang expert silicon project (xi) | 3,599,883 | - | - | (272,730) | 3,327,153 | Assets related |
| Yichang semiconductor silicon project (xii) | 3,400,000 | - | - | (266,667) | 3,133,333 | Assets related |
| Yichang CSG Display project (xiii) | 50,836,604 | - | - | (2,534,478) | 48,302,126 | Assets related |
| Xianning Photoelectric project (xiv) | 7,800,000 | - | - | - | 7,800,000 | Assets related |
| Group talent fund project (xv) | 171,000,000 | - | - | - | 171,000,000 | Income related |
| Qingyuan CSG Energy-Saving Industry Co-construction support fund(xvi) | 74,170,000 | - | (11,343,456) | 62,826,544 | Income related | |
| Others | 24,156,774 | 9,028,290 | (175,834) | (1,663,373) | 31,345,857 | Assets related/Income related |
| 562,701,103 | 83,769,880 | (2,560,534) | (42,084,669 ) | 601,825,780 |
(i) The allowance was granted by Tianjin Municipal Government. The allowance was used for establishing PV
power station by Tianjin CSG Architectural Glass Co., Ltd. The facilities belonged to Tianjin CSG uponcompletion. The allowance will be credited to income statement in 20 years, the useful life of the PV powerstation.
(ii) The allowance was granted by Dongguan Municipal Government. The allowance was used for establishing PV
power station by Dongguan CSG Architectural Glass Co., Ltd. The facilities belonged to Dongguan CSG uponcompletion. The allowance will be credited to income statement in 20 years, the useful life of the PV powerstation.
(iii) The allowance was granted by Langfang Municipal Government. The allowance was used for establishing PV
power station by Hebei CSG Glass Co., Ltd. ("Hebei CSG"). When the facilities were set up, they belonged toHebei CSG. The allowance will be credited to income statement in 20 years, the useful life of the PV powerstation.
(iv) The allowance was granted by Xianning Municipal Government. The allowance was used for establishing PV
power station by Xianning CSG Glass Co Ltd. The facilities belonged to Xianning CSG upon completion. Theallowance will be credited to income statement in 20 years, the useful life of the PV power station.
(v) The allowance was infrastructure compensation granted by Wujiang municipal government, and will be credited
to income statement in 15 years, the shortest operating period as committed by the Group.
(vi) The allowance was a pilot project for strategic emerging industry clusters development, which was used to
establish high performance ultra-thin electronic glass production lines by Qingyuan CSG. The allowance will becredited to income statement in 10 years, the useful life of the production line.
(vii) The balance represented amounts granted to Yichang CSG polysilicon Co., Ltd. by Yichang City Dongshan
Development Corporation under the provisions of the investment contract signed between the Group and theMunicipal Government of Yi Chang. The proceeds were designed for the construction of electricity transformerand the pipelines. Yichang polysilicon is entitled to the ownership of the facilities， which will be amortised by16 years according to the useful life of the converting station.
(viii) It represented the government supporting fund obtained by Yichang polysilicon from the acquiring of the assets
and liabilities of Crucible project of Yichang Hejing Photoelectric Ceramic Co., Ltd. The proceeds would beamortised and credited to income statement by 16 years after related assets were put into use.
(ix) It represented the funds granted by Chengdu local government for energy glass project. It will be amortised and
credited to income statement in 15 years, in accordance with the minimum operating period committed by theGroup.
(x) The allowance was granted by Shenzhen City Development and Reform Commission for the development of
Group Coating Film experimental project. The grant will be amortised and credited to income statement by 20years in the estimated useful life of the relevant fixed assets.
(xi) It represented the funds granted by Hubei local government for inport discount complement and international
corporation special subsidy. The grant will be amortised and credited to income statement by 12 to 15 years.
(xii) It represented the special subsidy of Yichang National Regional Strategic Emerging Industry Development Pilot
Project II, which is used to complement Yichang CSG Polysilicon “Hubei semiconductor silicon preparativetechnique project laboratory”. The grant will be amortised and credited to income statement by 15 years.
(xiii) It represented the funds granted by Yichang Municipal Government for Yichang CSG Display Company's flat
project construction support funds and construction of coil coating three-line project. The grant will be amortisedand credited to income statement by 15 years.
(xiv) It represented the funds granted by Xianning Government of the Project supporting fund for photoconductive
glass production line,which is used to pay for Xianning CSG Glass Co. Ltd. constructing the project ofphotoelectric photoelectric optical glass production line . After the completion of the production line, theownership belongs to Xianning photoelectric. The allowance will be credited to income statement in 8 years, theuseful life of the production line.
(xv) The allowance was granted by Administrative Commission of Yichang High-tech Industrial Development Zone.
For senior management personnel, engineering technical personnel and senior professional technical team whichis working at Yichang or plane to introduction, RMB171 million fund was set up, as a special fund for talentintroduction and housing resettlement.
(xvi) The allowance was granted by Fogang Municipal Government related 2018 province industry co-construction
support fund. The allowance was used for company development and operation by Qingyuan CSG NewEnergy-Saving Materials Co., Ltd.
(25) Share capital
| Movement for the year ended 31 December 2018 | |||||||||||||
| 31 December 2017 | New issues during the year | Bonus issue | Capitalisation | Others | 31 December 2018 | ||||||||
| RMB-denominated ordinary shares | 1,509,664,303 | - | - | 226,449,645 | 43,353,050 | 1,779,466,998 | |||||||
| Limited selling condition shares | 97,511,654 | 9,826,580 | - | 14,626,748 | (46,672,107) | 75,292,875 | |||||||
| Domestically listed foreign shares | 876,971,590 | - | - | 131,545,738 | - | 1,008,517,328 | |||||||
| 2,484,147,547 | 9,826,580 | - | 372,622,131 | (3,319,057) | 2,863,277,201 | ||||||||
The par value of the RMB-denominated ordinary shares is RMB1, and that of domestically listed foreign shares is HKD1.
| Movement for the year ended 31 December 2017 | |||||||||||||
| 31 December 2016 | New issues during the year | Bonus issue | Capitalisation | Others | 31 December 2017 | ||||||||
| RMB-denominated ordinary shares | 1,312,751,568 | - | - | 196,912,735 | - | 1,509,664,303 | |||||||
| Limited selling condition shares | - | 97,511,654 | - | 97,511,654 | |||||||||
| Domestically listed foreign shares | 762,583,992 | - | - | 114,387,598 | - | 876,971,590 | |||||||
| 2,075,335,560 | 97,511,654 | - | 311,300,333 | - | 2,484,147,547 | ||||||||
(26) Capital surplus
| 31 December 2017 | Increase in current year | Decrease in current year | 31 December 2018 | ||||
| Share premium (i) | 1,353,802,562 | 151,633,385 | (381,655,736) | 1,123,780,211 | |||
| Other capital surplus | (47,420,797) | 144,278,158 | (125,298,151) | (28,440,790) | |||
| Share of changes in equity other than comprehensive income and profit distribution of investees under the equity method | 757,420 | - | - | 757,420 | |||
| Share-based payment (ii) | 11,006,378 | 144,278,158 | (125,298,151) | 29,986,385 | |||
| Transfer of capital surplus recognized under the previous accounting system | (2,250,222) | - | - | (2,250,222) | |||
| Disposal of fractional shares | 1,316,208 | - | - | 1,316,208 | |||
| Purchase of minority interests | (87,197,562) | - | - | (87,197,562) | |||
| Shareholders interest-free loans | 28,946,981 | - | - | 28,946,981 | |||
| - | |||||||
| 1,306,381,765 | 295,911,543 | (506,953,887) | 1,095,339,421 |
| 31 December 2016 | Increase in current year | Decrease in current year | 31 December 2017 | ||||
| Share premium | 1,345,264,670 | 319,838,225 | (311,300,333) | 1,353,802,562 | |||
| Other capital surplus | (84,562,473) | 37,141,676 | - | (47,420,797) | |||
| Share of changes in equity other than comprehensive income and profit distribution of investees under the equity method | 757,420 | - | - | 757,420 | |||
| Share-based payment | 2,811,683 | 8,194,695 | - | 11,006,378 | |||
| Transfer of capital surplus recognised under the previous accounting system | (2,250,222) | - | - | (2,250,222) | |||
| Disposal of fractional shares | 1,316,208 | - | - | 1,316,208 | |||
| Purchase of minority interests | (87,197,562) | - | - | (87,197,562) | |||
| Shareholders interest-free loans | - | 28,946,981 | - | 28,946,981 | |||
| 1,260,702,197 | 356,979,901 | (311,300,333) | 1,306,381,765 |
(a) The reason for the decrease of capital reserve - other in current year was the acquisition of minority interests, with the detail as
follows:
(i)The Company passed the 2017 annual general meeting of shareholders held on May 14, 2018 and transferred 1.5 shares to every10 shares for all shareholders. The total share capital before the distribution was 2,484,147,547 shares, and the total share capital afterthe dividend was increased to 2,856,769,678 shares. Capital reserve decreased by RMB 372,622,131;
By the 2th temporary meeting of shareholders held on 6th August 2018,the company decided to repurchase and cancel thestill-restricted shares which have already been granted to and held by 15 recipients no longer qualified for “incentive plan” due toeither resignation or position adjustment 3,319,057 shares were repurchased and cancelled, the capital reserve was reduced by RMB9,033,605. The company has finished above cancellations of the restricted shares by 1st September 2018.
(ii)The Company held the 8th temporary meeting of Board member members on September 13, 2018 , which reviewed and approvedSeptember 13, 2018 to be the shares granting date and 75 recipients to be granted 9,826,580 restricted shares in total. The price ofshares to be granted was determined as RMB 3.68 /share., the capital reserve increased by RMB 26,335,234.
The Company held the 8th temporary meeting of Board member members on December 12, 2018 , which reviewed and approved thereleasing conditions on the first- time expiring trading restrictions of the initial part of the incentive plan on restricted shares fromordinary A . A total of 431 recipients of the incentive plan were able to fulfill the conditions. The amount of 43,353,050 sharescould be released from restrictions. Other capital reserve and share payment was decreased by RMB 125,298,151, capital reserve andcapital premium was decreased by RMB125,298,151. The restricted shares was released and listed by company on December 212018.
In addition, according to the Group’s performance in 2018, the unlocking conditions for the second post lock-up period for theordinary A restricted shares incentive plan for 2017 In addition, according to the Group’s performance in 2018, the unlockingconditions for the second post lock-up period for the restricted shares incentive plan for 2017 and for the second post lock-up periodfor the restricted shares incentive plan for 2018 were not met. Therefore, by December 31 2018, expenses for the second post lock-upperiod for the ordinary A restricted shares was reduced by RMB 41,856,285.
This year, due to the equity incentive plan, the share payment fee of RMB144,278,158 was confirmed
(27) Treasury shares
| 31 December 2017 | Increase in current year | Decrease in current year | 31 December 2018 | ||||
| Obligations of restricted share buybacks | 417,349,879 | 37,594,488 | (177,763,384）) | 277,180,983 | |||
| 417,349,879 | 37,594,488 | (177,763,384）) | 277,180,983 |
Explanation on changes in treasury stocks: The company confirms liabilities and treasury shares at the same time, based on thenumber of restricted shares issued and the corresponding repurchase price.
(28) Other comprehensive income
| Other comprehensive income in Balance Sheet | Other comprehensive income in Income Statement for the year ended 31 December 2018 | |||||||||||||
| 31 December 2017 | Attributable to parent company after tax | 31 December 2018 | Actual amount before tax for current year | Less: Reclassification of previous other comprehensive income to profit or loss in current year | Less: Income tax expenses | Attributable to parent company after tax | Attributable to minority shareholders after tax | |||||||
| Other comprehensive income items which will be reclassified subsequently to profit or loss | ||||||||||||||
| Financial rewards for energy-saving technical retrofits | 2,550,000 | - | 2,550,000 | - | - | - | - | - | ||||||
| Difference on translation of foreign currency financial statements | (601,057) | 3,131,291 | 2,530,234 | 3,131,291 | - | - | 3,131,291 | - | ||||||
| 1,948,943 | 3,131,291 | 5,080,234 | 3,131,291 | - | - | 3,131,291 | - | |||||||
| Other comprehensive income in Balance Sheet | Other comprehensive income in Income Statement for the year ended 31 December 2017 | ||||||||||||||
| 31 December 2016 | Attributable to parent company after tax | 31 December 2017 | Actual amount before tax for current year | Less: Reclassification of previous other comprehensive income to profit or loss in current year | Less: Income tax expenses | Attributable to parent company after tax | Attributable to minority shareholders after tax | ||||||||
| Other comprehensive income items which will be reclassified subsequently to profit or loss | |||||||||||||||
| Financial rewards for energy-saving technical retrofits | 2,550,000 | - | 2,550,000 | - | - | - | - | - | |||||||
| Difference on translation of foreign currency financial statements | 2,103,971 | (2,705,028) | (601,057) | (2,705,028) | - | - | (2,705,028) | - | |||||||
| 4,653,971 | (2,705,028) | 1,948,943 | (2,705,028) | - | - | (2,705,028) | - | ||||||||
(29) Special reserve
| 31 December 2017 | Increase in current year | Decrease in current year | 31 December 2018 | ||||
| Safety production costs | 3,224,938 | 8,319,885 | (5,476,223) | 6,068,600 |
The subsidiary Yichang CSG Polysilicon is a high risk chemical production enterprise. Therefore, the Company appropriated suchreserve in accordance with relevant regulations.
(30) Surplus reserve
| 31 December 2017 | Increase in current year | Decrease in current year | 31 December 2018 | ||||
| Statutory surplus reserve | 792,739,764 | 3,713,043 | - | 796,452,807 | |||
| Discretionary surplus reserve | 127,852,568 | - | - | 127,852,568 | |||
| 920,592,332 | 3,713,043 | - | 924,305,375 |
| 31 December 2016 | Increase in current year | Decrease in current year | 31 December 2017 | ||||
| Statutory surplus reserve | 760,655,662 | 32,084,102 | - | 792,739,764 | |||
| Discretionary surplus reserve | 127,852,568 | - | - | 127,852,568 | |||
| 888,508,230 | 32,084,102 | - | 920,592,332 |
In accordance with the Company Law of the People’s Republic of China and the Company’s Articles of Association, the Companyshould appropriate 10% of net profit for the year to the statutory surplus reserve, and the Company can cease appropriation when thestatutory surplus reserve accumulated to more than 50% of the registered capital. The statutory surplus reserve can be used to makeup for the loss or increase the paid-in capital after approval from the appropriate authorities. The Company accrued statutory surplusreserve at the amount of RMB3,713,043 based on 10% of the net profit, in 2018 (2017: RMB32,084,102, accrued at 10% of the netprofit).
The Company appropriates for the discretionary surplus reserve after the shareholders’ meeting approves the proposal from the Boardof Directors. The discretionary surplus reserve can be used to make up for the loss or increase the share capital after approval fromthe appropriate authorities. The Company did not appropriate to discretionary surplus reserve during the year.
(31) Undistributed profits
| 2018 | 2017 | ||
| Undistributed profits at beginning of year | 4,159,642,227 | 3,573,871,573 | |
| Add: Net profits attributable to shareholders of parent company | 452,965,935 | 825,388,312 | |
| Less: Appropriation for statutory surplus reserve | (3,713,043) | (32,084,102) | |
| Ordinary share dividends payable (a) | (122,630,396) | (207,533,556) | |
| Undistributed profits at end of year | 4,486,264,723 | 4,159,642,227 |
(a) Pursuant to the resolution of Board of Directors of the Company on 14 May 2018, the Company paid cash dividends of RMB0.5 (tax
inclusive) for each 10 shares based on total shares of 2,484,147,547, with the total cash dividends distributed of RMB124,207,377.
Recipients resigned were expected to be decreased revocable cash dividends of RMB 1,576,981 in current year.
(32) Revenue and cost of sales
| 2018 | 2017 | ||
| Revenue from main operations | 10,536,501,926 | 10,786,756,657 | |
| Revenue from other operations | 73,461,085 | 92,644,089 | |
| 10,609,963,011 | 10,879,400,746 | ||
| 2018 | 2017 | ||
| Cost of sales from main operations | 8,112,012,841 | 8,183,862,835 | |
| Cost of sales from other operations | 8,469,053 | 32,495,537 | |
| 8,120,481,894 | 8,216,358,372 |
(a) Revenue and cost of sales from main operations
Revenue and cost of sales from main operations analyzed by industry and product are set out below:
| 2018 | 2017 | ||||||
| Revenue | Cost | Revenue | Cost | ||||
| Glass industry | 7,385,946,431 | 5,375,433,121 | 6,975,512,082 | 5,179,173,783 | |||
| Solar energy industry | 2,296,917,214 | 2,170,991,475 | 3,091,397,745 | 2,493,891,466 | |||
| Electronic glass and display | 955,864,280 | 666,108,617 | 867,223,335 | 652,646,493 | |||
| Elimination | (102,225,999) | (100,520,372) | (147,376,505) | (141,848,907) | |||
| 10,536,501,926 | 8,112,012,841 | 10,786,756,657 | 8,183,862,835 | ||||
(b) Revenue and cost of sales from other operations
| 2018 | 2017 | ||||||
| Revenue | Cost | Revenue | Cost | ||||
| Sales of raw materials and Others | 73,461,085 | 8,469,053 | 92,644,089 | 32,495,537 | |||
| 73,461,085 | 8,469,053 | 92,644,089 | 32,495,537 | ||||
(33) Taxes and surtax
| 2018 | 2017 | ||
| City maintenance and construction tax | 37,842,081 | 33,115,925 | |
| Educational surcharge | 29,975,981 | 26,156,521 | |
| Housing property tax | 31,453,204 | 29,539,408 | |
| Land use rights | 20,147,106 | 21,941,304 | |
| Stamp tax | 5,492,647 | 5,395,333 |
| Environmental tax | 10,136,863 | - | |
| Others | 5,376,969 | 8,375,435 | |
| 140,424,851 | 124,523,926 |
(34) Selling expenses
| 2018 | 2017 | ||
| Freight expenses | 163,197,092 | 159,825,411 | |
| Employee benefits | 120,513,530 | 110,068,886 | |
| Entertainment fees | 14,654,064 | 12,690,770 | |
| Business travel expenses | 11,066,121 | 10,931,013 | |
| Vehicle use fees | 8,480,143 | 7,609,882 | |
| Rental expenses | 6,469,600 | 5,937,331 | |
| Depreciation expenses | 973,181 | 970,739 | |
| Others | 29,629,728 | 28,097,691 | |
| 354,983,459 | 336,131,723 |
(35) Administrative expenses
| 2018 | 2017 | ||
| Employee benefits | 442,272,618 | 295,657,274 | |
| Depreciation expenses | 62,737,730 | 65,929,139 | |
| Amortization of intangible assets | 50,567,703 | 43,884,166 | |
| General office expenses | 22,933,432 | 25,126,422 | |
| Labor union funds | 15,317,022 | 14,696,230 | |
| Entertainment fees | 14,159,098 | 12,027,303 | |
| Business travel expenses | 11,903,093 | 11,074,568 | |
| Utility fees | 10,833,683 | 10,108,470 | |
| Canteen costs | 8,202,537 | 9,357,983 | |
| Vehicle use fees | 6,853,349 | 6,639,769 | |
| Consulting advisers | 32,308,070 | 24,935,512 | |
| Others | 53,126,916 | 69,215,561 | |
| 731,215,251 | 588,652,397 |
(36) Research and development expenses
| 2018 | 2017 | ||
| Research and development expenses | 338,791,891 | 330,677,375 | |
| 338,791,891 | 330,677,375 |
(37) Financial expenses
| 2018 | 2017 | ||
| Interest on borrowings | 423,763,192 | 344,459,771 | |
| Less: Capitalized interest | (22,136,125) | (29,856,175) | |
| Interest expenses | 401,627,067 | 314,603,596 | |
| Less: Interest income | (61,857,535) | (12,606,285) | |
| Exchange losses | (4,955,956) | 4,780,451 | |
| Others | 14,589,911 | 9,183,318 | |
| 349,403,487 | 315,961,080 |
(38) Expenses by nature
The cost of sales, selling and distribution expenses, general and administrative expenses, Research and development expenses in theincome statement are listed as follows by nature:
| 2018 | 2017 | ||
| Changes in inventories of finished goods and work in progress | 98,883,578 | (139,651,079) | |
| Consumed raw materials and low value consumables, etc. | 4,545,216,065 | 4,941,314,821 | |
| Fuel fee | 1,223,356,407 | 1,143,379,014 | |
| Employee benefits | 1,335,584,375 | 1,222,510,952 | |
| Depreciation and amortization expenses | 1,018,151,059 | 1,002,432,274 | |
| Utility fees | 813,320,471 | 778,033,060 | |
| Freight expenses | 171,566,693 | 159,825,411 | |
| General office expenses | 42,726,767 | 43,816,479 | |
| Canteen costs | 37,952,058 | 39,682,701 | |
| Business travel expenses | 27,455,316 | 26,904,472 | |
| Entertainment fees | 31,045,998 | 26,167,761 | |
| Vehicle use fee | 16,882,396 | 15,851,907 | |
| Rental expenses | 11,212,221 | 10,489,299 | |
| Others | 172,119,091 | 201,062,795 | |
| 9,545,472,495 | 9,471,819,867 |
(39) Asset impairment losses
| 2018 | 2017 | ||
| Impairment loss of fixed assets | 12,373,970 | 36,260,304 | |
| Bad debts | 538,413 | 6,187,739 | |
| Decline in the value of inventories | 497,272 | 68,974 | |
| Impairment loss in construction in progress | 102,464,495 | 26,882,738 | |
| Impairment loss in goodwill | 20,672,000 | - | |
| 136,546,150 | 69,399,755 |
(40) Investment income
| 2018 | 2017 | ||
| Losses from disposal of financial liabilities at fair value through profit or loss | - | 427,636 | |
| - | 427,636 |
There is no significant restriction on the remittance of investment income to the Group.
(41) Asset disposal income
| 2018 | 2017 | ||
| Gains on disposal of non-current assets | (454,368) | (1,768,993) | |
| (454,368) | (1,768,993) |
(42) Other income
| 2018 | 2017 | ||
| Government subsidy amortization | 42,084,669 | 47,070,175 | |
| Industry support funds | 17,950,780 | 16,123,793 | |
| Research grants | 10,368,881 | 6,940,140 | |
| Government incentive funds | 13,647,951 | 12,457,123 | |
| Others | 10,565,758 | 1,750,583 | |
| 94,618,039 | 84,341,814 |
(43) Non-operating income
| 2018 | 2017 | Amount of non-recurring gains and losses included in 2018 | |||
| Government grants (a) | 217,500 | 3,533,603 | 217,500 |
| Default income | 50,400 | 275,000 | 50,400 | ||
| Compensation income | 6,537,875 | 15,557,320 | 6,537,875 | ||
| Amounts unable to pay | 4,778,583 | 27,959 | 4,778,583 | ||
| Others | 2,274,293 | 1,369,160 | 2,274,293 | ||
| 13,858,651 | 20,763,042 | 13,858,651 |
(a) Government grants are analysed below:
| 2018 | 2017 | Category | |||
| Government awards fund | 150,000 | 2,748,263 | Income related | ||
| Interest subsidy for technological renovation | - | 600,000 | Income related | ||
| Others | 67,500 | 185,340 | Income related | ||
| 217,500 | 3,533,603 |
(44) Non-operating expenses
| 2018 | 2017 | Amount of non-recurring gains and losses included in 2018 | |||
| Compensation | - | 492,228 | - | ||
| Donation | 260,033 | 1,118,999 | 260,033 | ||
| Others | 1,281,438 | 3,541,364 | 1,281,438 | ||
| 1,541,471 | 5,152,591 | 1,541,471 |
(45) Income tax expenses
| 2018 | 2017 | ||
| Current income tax | 129,842,061 | 160,923,182 | |
| Deferred income tax | (57,453,770) | 6,747,809 | |
| 72,388,291 | 167,670,991 |
The reconciliation from income tax calculated based on the applicable tax rates and total profit presented in the consolidated incomestatement to the income tax expenses is listed below:
| 2018 | 2017 | ||
| Total profit | 544,596,879 | 996,307,026 | |
| Income tax expenses calculated at applicable tax rates by company | 64,115,428 | 149,078,702 | |
| Effect of changes in tax rates | 1,512,060 | - | |
| Costs, expenses and losses not deductible for tax purposes | 19,250,051 | 7,893,473 |
| Income not subject to tax | - | (33,833) | |
| Deductible losses for which no deferred tax asset was recognised in current period | 36,559,709 | 20,825,885 | |
| Effect of tax incentives | (32,258,314) | (13,637,793) | |
| Reconciliation of income tax for prior years in annual filing | (16,790,643) | 3,544,557 | |
| Income tax expenses | 72,388,291 | 167,670,991 |
(46) Earnings per share
The basic earnings per share is calculated by dividing the net profit attributable to ordinary shareholders of the company by theweighted average number of ordinary shares outstanding.
The numerator of diluted earnings per share is determined based on the net profit attributable to the common shareholders of thecompany's common stock. The following factors are adjusted to determine: (1) interest on dilutive potential ordinary shares that havebeen recognized as expenses in the current period; (2) dilutive potential ordinary The income or expenses that will be generated whenthe shares are converted; (3) The above-mentioned adjustments related to income tax effects.
The denominator of the diluted earnings per share equals the sum of: (1) the weighted average number of ordinary shares of theparent company in the underlying earnings per share; (2) ordinary shares that are increased assuming the dilution of potentialordinary shares into common shares The weighted average.
When calculating the weighted average of the number of ordinary shares increased from diluted common stocks to ordinary shares,the diluted potential ordinary shares issued during the previous period are assumed to be converted at the beginning of the currentperiod; diluted potential ordinary shares of the current period are issued. , assuming a conversion on the issue date.
The basic calculation of basic earnings per share and diluted earnings per share are as follows:
(a) Basic earnings per share:
| 2018 | 2017 | ||
| Consolidated net profit attributable to ordinary shareholders of parent company | 452,965,935 | 825,388,312 | |
| Weighted average number of outstanding ordinary | 2,787,726,094 | 2,744,631,277 | |
| Basic earnings per share | 0.16 | 0.30 |
(b) Diluted earnings per share:
Diluted earnings per share are calculated by dividing consolidated net profit attributable to ordinary shareholders of the parentcompany adjusted based on the dilutive potential ordinary shares by the adjusted weighted average number of outstanding ordinaryshares of the Company. For the year ended 31 December 2018, the Company had diluted earnings per shares of RMB 0.16(2017:
RMB 0.29 per share).
(47) Notes to the cash flow statement(a) Cash generated by other operating activities
| 2018 | 2017 | ||
| Government grants | 136,520,750 | 40,805,242 | |
| Interest income | 61,857,535 | 12,606,285 | |
| Others | 17,445,309 | 18,937,040 | |
| 215,823,594 | 72,348,567 |
(b) Cash paid relating to other operating activities
| 2018 | 2017 | ||
| Freight expenses | 194,159,982 | 170,941,469 | |
| Canteen costs | 37,952,058 | 39,682,701 | |
| General office expenses | 34,495,884 | 34,267,447 | |
| Research and development expenses | 35,304,568 | 31,684,954 | |
| Business travel expenses | 28,171,433 | 27,935,416 | |
| Entertainment fees | 28,744,002 | 25,206,039 | |
| Vehicle use fee | 16,882,396 | 15,851,907 | |
| Maintenance fee | 34,453,953 | 25,969,168 | |
| Rental expenses | 11,212,221 | 10,489,299 | |
| Insurance | 11,942,647 | 8,759,738 | |
| Bank fees | 14,589,911 | 9,183,318 | |
| Others | 155,877,385 | 186,004,633 | |
| 603,786,440 | 585,976,089 |
(c) Cash generated by other investing activities
| 2018 | 2017 | ||
| Income from trial production of construction in progress | 30,517,662 | 124,108,255 | |
| Government grants related to assets received | - | 15,950,000 | |
| Land grant funds received | - | 28,098,000 | |
| Insurance claims received | - | 19,600,000 | |
| Deposit | 537,656 | - | |
| 31,055,318 | 187,756,255 |
(d) Cash paid relating to other investing activities
| 2018 | 2017 | ||
| Trial production expenditure in construction | 118,263,080 | 156,543,177 | |
| Deposit | - | 43,541,859 | |
| 118,263,080 | 200,085,036 |
(e) Cash generated by other financing activities
| 2018 | 2017 | ||
| Interest-free borrowing | - | 1,610,000,000 | |
| Income from financing leases | - | 1,986,000,000 | |
| Receiving industrial production dispatch funds | - | 20,000,000 | |
| - | 3,616,000,000 |
(f) Cash payments relating to other financing activities
| 2018 | 2017 | ||
| Repay financing leases | 688,061,105 | 104,821,449 | |
| Pay for industrial production scheduling funds | - | 31,000,000 | |
| Return interest-free loan | - | 1,610,000,000 | |
| Deposit | 10,098,279 | 5,030,994 | |
| Payment of loan, security and fee for bills | 9,613,905 | 32,257,231 | |
| Entrusted loan | 300,000,000 | - | |
| Equity incentive fund | 12,352,662 | - | |
| 1,020,125,951 | 1,783,109,674 |
(48) Supplementary information to the cash flow statement
(a) Reconciliation from net profit to cash flows from operating activities
| 2018 | 2017 | ||
| Net profit | 472,208,588 | 828,636,035 | |
| Add: Provision for asset impairment | 136,546,150 | 69,399,755 | |
| Depreciation of fixed assets | 965,935,450 | 957,475,579 | |
| Amortization of intangible assets | 50,567,703 | 43,884,166 | |
| Net movements of safety production costs | 2,843,662 | (2,618,535) | |
| Amortization of long-term prepaid expenses | 1,647,906 | 1,072,529 | |
| Net losses/(gains) on disposal of fixed assets and intangible assets | 141,486,074 | 8,194,695 | |
| Employee compensation based on shares | 454,368 | 1,768,993 | |
| Financial expenses | 401,627,067 | 314,603,596 | |
| Investment income/(loss) | - | (427,636) | |
| Decrease/(increase) in deferred tax assets | (58,656,656) | 15,578,992 | |
| Increase/(decrease) in deferred tax liabilities | 1,202,886 | (8,833,183) | |
| (Increase)/decrease in inventories | 85,267,118 | (201,257,769) | |
| Increase in operating payables | (63,345,244) | (206,859,922) | |
| Increase in operating receivables | (7,406,972) | 642,828,861 | |
| Net cash flows from operating activities | 2,130,378,100 | 2,463,446,156 |
(b) Net increase/(decrease) in cash
| 2018 | 2017 | ||
| Cash and cash equivalents at end of year | 2,225,126,913 | 2,459,753,165 | |
| Less: Cash and cash equivalents at beginning of year | (2,459,753,165) | (584,566,990) | |
| Net increase in cash and cash equivalents | (234,626,252) | 1,875,186,175 |
(c) Cash and cash equivalents
| 31 December 2018 | 31 December 2017 | ||
| Cash | |||
| - Cash on hand | 9,731 | 36,182 | |
| - Bank deposits that can be readily drawn on demand | 2,225,117,182 | 2,409,716,983 | |
| - Other cash balances that can be readily drawn on demand | - | 50,000,000 | |
| Cash at end of year | 2,225,126,913 | 2,459,753,165 |
(49) Assets with restricted ownership or use rights
| 2018 | 2017 | Reason | ||
| Monetary assets | 1,320,807 | 2,852,599 | Restricted deposit flow | |
| Property, plant and equipment | 2,381,348,551 | 2,369,789,041 | Limited finance lease and Restricted mortage loan | |
| 2,382,669,358 | 2,372,641,640 |
(50) Monetary items denominated in foreign currencies
| 31 December 2018 | |||||
| Balances denominated in foreign currencies | Exchange rates | Balances denominated in RMB | |||
| Cash at bank and on hand - | |||||
| HKD | 1,579,085 | 0.8762 | 1,383,594 | ||
| USD | 11,853,148 | 6.8632 | 81,350,525 | ||
| EUR | 70,422 | 7.8473 | 552,623 | ||
| JPY | 12,072,746 | 0.0619 | 747,303 | ||
| AUD | 1,036 | 4.8250 | 4,999 | ||
| 84,039,044 | |||||
| Accounts receivable - | |||||
| HKD | 1,566,848 | 0.8762 | 1,372,872 | ||
| USD | 17,294,818 | 6.8632 | 118,697,795 | ||
| EUR | 946,785 | 7.8473 | 7,429,706 | ||
| 127,500,373 | |||||
| Short-term borrowings - | |||||
| HKD | 75,000,000 | 0.8762 | 65,715,000 | ||
| 65,715,000 | |||||
| Accounts payable - | |||||
| HKD | 307 | 0.8762 | 269 | ||
| USD | 8,184,348 | 6.8632 | 56,170,817 | ||
| EUR | 1,372,385 | 7.8473 | 10,769,517 | ||
| JPY | 26,293,425 | 0.0619 | 1,627,563 | ||
| 68,568,166 |
5 The changes of consolidation scope
On 11 Feb 2018, the Group set up a subsidiary, Qingyuan CGS Quartz Materials co , Ltd. and the Group has investedRMB 6,000,000 . The Group owns 100% of its equity.
On 30 Mar 2018, the Group set up a subsidiary, Dongguan Jingyu New material Co., Ltd. and the Group has investedRMB 24,000,000. The Group owns 80% of its equity.
The Group established a subsidiary company, Changshu CSG New Energy Co., Ltd. on 22 May 2018, and the Grouphas not invested yet. The Company holds 100% of its shares.
6 Interest in other entities
(1) Interest in subsidiaries
(a) Structure of the enterprise group
As at 31 December 2018, information of the Company’s major subsidiaries is set out below:
| Major business location | Place of registration | Scope of business | Shareholding (%) | ||
| Direct | Indirect | ||||
| Chengdu CSG | Chengdu, PRC | Chengdu, PRC | Development, production and sales of special glass | 75% | 25% |
| Sichuan CSG Energy Conservation | Chengdu, PRC | Chengdu, PRC | Development, production and sales of special glass and processing of glass | 75% | 25% |
| Tianjin Energy Conservation | Tianjin, PRC | Tianjin, PRC | Development, production and sales of special glass | 75% | 25% |
| Dongguan CSG Engineering | Dongguan, PRC | Dongguan, PRC | Intensive processing of glass | 75% | 25% |
| Dongguan CSG Solar | Dongguan, PRC | Dongguan, PRC | Production and sales of solar glass | 75% | 25% |
| Dongguan CSG PV-tech | Dongguan, PRC | Dongguan, PRC | Production and sales of hi-tech green battery and components | - | 100% |
| Yichang CSG Polysilicon | Yichang, PRC | Yichang, PRC | Production and sales of high-purity silicon materials | 75% | 25% |
| Wujiang CSG Engineering | Wujiang, PRC | Wujiang, PRC | Intensive processing of glass | 75% | 25% |
| Hebei CSG | Yongqing, PRC | Yongqing, PRC | Production and sales of special glass | 75% | 25% |
| Wujiang CSG | Wujiang, PRC | Wujiang, PRC | Production and sales of special glass | 100% | - |
| China Southern Glass (Hong Kong) Limited | Hong Kong, PRC | Hong Kong, PRC | Investment holding | 100% | - |
| Hebei Shichuang | Yongqing, PRC | Yongqing, PRC | Production and sales of ultra-thin electronic glass | 100% | - |
| Xianning CSG | Xianning, PRC | Xianning, PRC | Production and sales of special glass | 75% | 25% |
| Xianning CSG Energy-Saving | Xianning, PRC | Xianning, PRC | Intensive processing of glass | 75% | 25% |
| Qingyuan CSG Energy-Saving | Qingyuan, PRC | Qingyuan, PRC | Production and sales of ultra-thin electronic glass | 100% | - |
| Shenzhen CSG Financial Leasing Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Finance leasing, etc. | 75% | 25% |
| Jiangyou CSG Mining Development Co. Ltd. | Jiangyou, PRC | Jiangyou, PRC | Production and sales of silica and its by-products | 100% | - |
| Shenzhen CSG PV Energy Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Investment management of photovoltaic plant | 100% | - |
| Qingyuan CSG New Energy Co., Ltd. | Qingyuan, PRC | Qingyuan, PRC | Clean energy development, photovoltaic power generation | - | 100% |
| Suzhou CSG PV-tech Co., Ltd. | Wujiang, | Wujiang, | Clean energy development, photovoltaic power | - | 100% |
| PRC | PRC | generation | |||
| Wujiang CSG New Energy Co., Ltd. | Wujiang, PRC | Wujiang, PRC | Clean energy development, photovoltaic power generation | - | 100% |
| Yichang CSG New Energy Co., Ltd | Yichang, PRC | Yichang, PRC | Clean energy development, photovoltaic power generation | - | 100% |
| Shenzhen CSG Display: | Shenzhen, PRC | Shenzhen, PRC | Production and sales of display component products | 60.80% | - |
| Xianning CSG Photoelectric | Xianning, PRC | Xianning, PRC | Photoelectric glass and high aluminium glass | 37.50% | 62.50% |
(b) Subsidiaries with significant minority interests
| Subsidiaries | Shareholding of minority shareholders | Profit or loss attributable to minority shareholders for the year ended 31 December 2018 | Dividends distributed to minority shareholders for the year ended 31 December 2018 | Minority interests as at 31 December 2018 |
| Shenzhen CSG Display | 39.20% | 15,900,492 | - | 318,802,856 |
The major financial information of the significant non-fully-owned subsidiaries of the Group is listed below:
| 31 December 2018 | |||||||||
| Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | ||||
| Shenzhen CSG Display | 220,538,417 | 1,418,945,195 | 1,639,483,612 | 620,430,756 | 171,541,290 | 791,972,046 | |||
| 2018 | |||||||||
| Revenue | Net profit | Total comprehensive income | Cash flows from operating activities | ||||||
| Shenzhen CSG Display | 564,971,827 | 49,063,159 | 49,063,159 | 143,806,892 | |||||
7 Segment information
The Group's business activities are categorized by product and service as follows:
- Glass segment, engaged in production and sales of float glass and engineering glass and the silica for the
production thereof, etc.- Solar energy segment, engaged in manufacturing and sales of polycrystalline silicon and solar battery and
applications, etc.- Electronic glass and display segment is responsible for production and sales of display components and special
ultra-thin glass products, etc.
The reportable segments of the Group are the business units that provide different products or service. Different businesses requiredifferent technologies and marketing strategies. The Group, therefore, separately manages the production and operation of eachreportable segment and Estimates their operating results respectively, in order to make decisions about resources to be allocated tothese segments and to assess their performance.
Inter-segment transfer prices are measured by reference to selling prices to third parties.
The assets are allocated based on the operations of the segment and the physical location of the asset. The liabilities are allocatedbased on the operations of the segment. Expenses indirectly attributable to each segment are allocated to the segments based on theproportion of each segment’s revenue.
(a) Segment information as at and for the year ended 31 December 2018 is as follows:
| Flat glass | Electronic glass and displays | Solar energy | Others | Unallocated | Elimination | Total | |||||||||
| Revenue from external customers | 7,348,784,136 | 959,296,761 | 2,300,739,737 | - | 1,142,377 | - | 10,609,963,011 | ||||||||
| Inter-segment revenue | 104,770,988 | 778,667 | 41,036,737 | - | 57,758,560 | (204,344,952) | - | ||||||||
| Interest income | 3,071,723 | 173,121 | 458,674 | 621 | 58,153,396 | - | 61,857,535 | ||||||||
| Interest expenses | (166,301,267) | (18,270,988) | ( 84,347,386 ) | - | (132,907,678) | 200,252 | (401,627,067) | ||||||||
| Asset impairment losses | (21,099,608) | (34,175) | (115,389,417) | - | (22,950) | - | (136,546,150) | ||||||||
| Depreciation and amortization expenses | (596,848,697) | (143,796,422) | (270,419,285) | (24,083) | ( 7,062,572) | - | (1,018,151,059) | ||||||||
| Total profit/(loss) | 915,309,261 | 163,147,030 | (296,236,904) | (25,076) | (235,891,805) | (1,705,627) | 544,596,879 | ||||||||
| Income tax (expenses)/income | (113,371,067) | (20,814,888) | 58,961,350 | - | 2,836,314 | - | (72,388,291) | ||||||||
| Net profit/(loss) | 801,938,194 | 142,332,142 | (237,275,554) | (25,076) | (233,055,491) | (1,705,627) | 472,208,588 | ||||||||
| Total assets | 8,463,669,998 | 3,209,225,123 | 4,665,311,805 | 641,334 | 2,775,385,924 | - | 19,114,234,184 | ||||||||
| Total liabilities | 3,064,099,160 | 831,715,506 | 1,050,655,995 | 2,504,400 | 4,715,826,661 | - | 9,664,801,722 |
| Increase in non-current assets | 358,628,578 | 170,767,439 | 67,224,833 | - | 4,861,828 | - | 601,482,678 |
(b) Segment information as at and for the year ended 31 December 2017 is as follows:
| Flat glass | Electronic glass and displays | Solar energy | Others | Unallocated | Elimination | Total | |||||||
| Revenue from external customers | 6,954,683,103 | 873,166,517 | 3,050,921,865 | - | 629,261 | - | 10,879,400,746 | ||||||
| Inter-segment revenue | 97,227,192 | 701,963 | 74,689,369 | - | 58,058,305 | (230,676,829) | - | ||||||
| Interest income | 1,152,232 | 146,973 | 262,942 | 608 | 11,043,530 | - | 12,606,285 | ||||||
| Interest expenses | (153,982,540) | (32,003,353) | (79,797,858) | - | (54,488,918) | 5,669,073 | (314,603,596) | ||||||
| Asset impairment losses | (20,109,566) | (352,808) | (48,857,162) | - | (80,219) | - | (69,399,755) | ||||||
| Depreciation and amortization expenses | (601,774,748) | (132,769,853) | (261,527,443) | (107,198) | (6,253,032) | - | (1,002,432,274) | ||||||
| Total profit/(loss) | 827,335,674 | 80,463,836 | 218,437,923 | (110,328) | (124,292,481) | (5,527,598) | 996,307,026 | ||||||
| Income tax (expenses)/income | (118,701,953) | (21,223,939) | (23,950,456) | - | (3,794,643) | - | (167,670,991) | ||||||
| Net profit/(loss) | 708,633,721 | 59,239,897 | 194,487,467 | (110,328) | (128,087,124) | (5,527,598) | 828,636,035 |
| Total assets | 9,121,982,895 | 3,032,467,443 | 4,969,121,408 | 664,853 | 2,410,765,769 | -- | 19,535,002,368 |
| Total liabilities | 3,453,100,959 | 856,548,520 | 1,640,361,900 | 2,502,814 | 4,802,865,064 | - | 10,755,379,257 |
| Increase in non-current assets | 160,029,169 | 459,791,787 | 629,473,708 | - | 2,875,254 | - | 1,252,169,918 | ||||||
The Group’s revenue from external customers domestically and in foreign countries or geographical areas, and the totalnon-current assets other than financial assets and deferred tax assets located domestically and in foreign countries orgeographical areas are as follows:
| Revenue from external customers | 2018 | 2017 | |
| Mainland | 9,151,411,893 | 9,506,249,433 | |
| Hong Kong, PRC | 196,186,618 | 434,551,436 | |
| Europe | 53,541,882 | 26,534,686 | |
| Asia (other than Mainland and Hong Kong) | 1,125,389,041 | 848,958,711 | |
| Australia | 39,605,066 | 37,937,222 | |
| North America | 31,189,420 | 6,030,936 | |
| Other regions | 12,639,091 | 19,138,322 | |
| 10,609,963,011 | 10,879,400,746 |
| Total non-current assets | 31 December 2018 | 31 December 2017 | |
| Mainland | 14,033,948,714 | 14,505,740,522 | |
| Hong Kong, PRC | 12,647,783 | 12,798,642 | |
| 14,046,596,497 | 14,518,539,164 |
No revenue from a single customer exceeded 10% or more of the Group’s revenue.
8 Related parties and related party transactions
(1) Information of the parent company
The Company regards no entity as the parent company.
(2) The subsidiaries
The general information and other related information of the subsidiaries are set out in Note 6(1).
(3) The associates
On December 31, 2018, the Company has no joint venture.
(4) Other related parties information
| Relationship with the Group | |
| Shenzhen Jushenghua Co.,Ltd. (“Jushenghua”) | Persons acting in concert with the first majority shareholder of the Group |
| Shenzhen Qianhai Ruinan Investment LLP | Controlled by the former key management personnel of the Croup |
| Xinjiang Qianhai United Property & Casualty Insurance | Related parties of group shareholders |
(5) Related party transactions
(a) Purchase and sales of goods, provision and receiving of labor
None
(b) Leases
None
(c) Gains on equity transfer
None
(d) Acquisition of equity
None
(e) Advances paid on behalf of related parties
None
(f) Remuneration of key management
| 2018 | 2017 | ||
| Remuneration | 23,846,000 | 12,030,000 |
(g) Other
| Related parties | Related party transactions | 2018 | 2017 | |
| Shenzhen Qianhai Ruinan Investment LLP | Buy life insurance for employees | 2,515,064 | 2,416,456 | |
| Xinjiang Qianhai United Property & Casualty Insurance | Buy car insurance for employees | 481,505 | 374,076 | |
| 2,996,569 | 2,790,532 |
(6) Commitments in relation to related parties
The commitments in relation to related parties contracted for but not yet necessary to be recognised on the balance sheet bythe Group as at the balance sheet date are as follows:
| Related parties | Related party transactions | Restrictive terms on borrowings | 2018 | 2017 | |
| Shenzhen Jushenghua Co., Ltd. (“Jushenghua”) | Facility of interest-free loans provided for the Company | Nil | 2,000,000,000 | 2,000,000,000 |
On 22 November 2016, the Company received a letter from its shareholder, Jushenghua, stating that to support the Group’ssteady operation and development, Jushenghua, as the shareholder of the Company, would like to offer interest-freeborrowings with the total amount of RMB2 billion to the Company or through related parties designated by it. For anyborrowing drawn, its repayment date is negotiated by the Company and Jushenghua upon withdrawal. When a borrowing isdue, if an extension is needed, the Company can apply to the actual lender based on the Company’s operation; where theactual lender agrees with the extension application, the term of the borrowing is extended accordingly. The shareholderprovided nil interest free loan to the group in 2018.
9 Share Payment
1. Overall situation of share payment
| The total number of various equity instruments that have repurchased in the current period | 3,319,057 shares |
| Total amount of various equity instruments that the company exercises during the current period | 43,353,050 shares |
| The total number of equity instruments granted by the company in the current period Restricted shares | 9,826,580 shares |
| The scope of the company’s outstanding share options and the remaining duration of the contract at the end of the period | - |
| The scope of the company's exercise of other equity instruments at the end of the period and the remaining duration of the contract | - |
Note: On December 11, 2017, reviewed and approved by the Group's eighth session of the Board of Directors, the Groupimplemented the 2017 A Share Restricted Stock Incentive Plan. The incentive targets for the restricted shares granted underthis plan include company directors and senior management personnel. The total of 454 core management teams, companytechnology members and main employees. The first grant date of this restricted stock was December 11, 2017. The companygranted 97,511,654 restricted shares for the first time to 454 incentive targets. The initial grant price was 4.28RMB per share.Reserved restricted stock ending balance 17,046,869 shares, the grant price has not been determined. The shares granted ofthe first time has been registered and listed.
By the 2th temporary meeting of shareholders held on 6th August 2018,the company decided to repurchase and cancel thestill-restricted shares which have already been granted to and held by 15recipients no longer qualified for “incentive plan”due to either resignation or position adjustment 3,319,057 shares were repurchased and cancelled, The company has finishedabove cancellations of the restricted shares by 1st September 2018.
The Company held the 8th temporary meeting of Board member members on December 12, 2018 , which reviewed andapproved the releasing conditions on the first- time expiring trading restrictions of the initial part of the incentive plan onrestricted shares from ordinary A . A total of 431 recipients of the incentive plan were able to fullfil the conditions. Theamount of 43,353,050 shares could be released from restrictions.
The Company held the 8th temporary meeting of Board member members on September 13, 2018 , which reviewed andapproved September 13, 2018 to be the shares granting date and 75 recipients to be granted 9,826,580 restricted shares intotal.
This incentive plan is valid for 48 months from the date of grant of the restricted stock to the date of unlocking of allrestricted stocks or the completion of repurchase and cancellation. During the unlocking/exercise period, if theunlocking/exercise condition specified in the incentive plan is reached, the restricted stock granted is unlocked in threephases after 12 months from the grant date.
The unlock period is shown in the following table:
| Unlock Schedule | Unlock Time | Unlock Ratio |
| First unlock | from the date of the first transaction 12 months after the award date to the date of the last transaction within 24 months from the grant date. | 40% |
| Second unlock | from the date of the first trading day 24 months after the grant date to the date of the last trading day within 36 months from the grant date | 30% |
| Third unlock | from the date of the first trading day 36 months after the grant date to the day of the last trading day within 48 months from the grant date | 30% |
2. Equity-settled share payment
| Method for Determining the Fair Value of Equity Instruments on the Grant Date | Black-Scholes Model |
| Determination of the best estimate of the number of vesting equity instruments | Based on the latest information on the change in the number of exercisable rights and the completion of performance indicators, the number of equity instruments that are expected to be exercised is revised. |
| Reasons for significant differences between current estimates and previous estimates | Not applicable |
| Cumulative amount of equity-settled share-based payment in capital reserves | 152,472,853 |
| Total equity confirmed by equity-settled share-based payment in this period | 144,278,158 |
According to the relevant provisions of Accounting Standards for Business Enterprises No. 11 - Share Payment andEnterprise Accounting Standard No. 22 - Recognition and Measurement of Financial Instruments, the Group uses theBlack-Scholes model (BS model) as a pricing model, deducting incentive objects. The fair value of the restricted stock willbe used after the lock-in costs that are required to obtain the rational expected return from the sales restriction period arelifted in the future. The Group will, on each balance sheet date of the lock-in period, revise the number of restricted stocksthat are expected to be unlikable based on the newly obtained changes in the number of unlockable persons and performanceindicators, and follow the fair value of the restricted stock grant date. The services obtained during the current period areincluded in the relevant costs or expenses and capital reserves.
The Group actually granted restricted stocks of 97,511,654 shares in 2017, and the total fair value of the equity instrumentsgranted to the incentive target for the first day of grant was RMB 289,519,900, the total fair value as the total cost of thecompany's equity incentive plan will be confirmed in stages according to the unlocking/exercise ratio during theimplementation of the equity incentive plan, and will be included in the "management fees and Construction in progress " ofeach period accordingly.
By the 2th temporary meeting of shareholders held on 6th August 2018,the company decided to repurchase and cancel thestill-restricted shares which have already been granted to and held by 15 recipients no longer qualified for “incentive plan”due to either resignation or position adjustment 3,319,057 shares were repurchased and cancelled, The company has finishedabove cancellations of the restricted shares by 1st September 2018.
The Company held the 8th temporary meeting of Board member members on September 13, 2018 , which reviewed andapproved September 13, 2018 to be the shares granting date and 75 recipients to be granted 9,826,580 restricted shares intotal.
The Company held the 8th temporary meeting of Board member members on December 12, 2018, which reviewed andapproved the releasing conditions on the first- time expiring trading restrictions of the initial part of the incentive plan onrestricted shares from ordinary A . A total of 431 recipients of the incentive plan were able to fulfill the conditions. The
amount of 43,353,050 shares could be released from restrictions. The restricted shares was released and listed bycompany on December 21 2018.
In addition, according to the Group’s performance in 2018, the unlocking conditions for the second post lock-up period forthe ordinary A restricted shares incentive plan for 2017 In addition, according to the Group’s performance in 2018, theunlocking conditions for the second post lock-up period for the restricted shares incentive plan for 2017 and for the secondpost lock-up period for the restricted shares incentive plan for 2018 were not met. Therefore, by December 31 2018 ,expensesfor the second post lock-up period for the ordinary A restricted shares was reduced by RMB 41,856,285.
In 2018, the Group achieved conditions for unlocking restricted stocks. In the current period, the relevant cost sharing amountof the incentive plan was recognized as RMB 144,278,158.
10 Contingencies
Nil.
11 Commitments
(1) Capital commitments
Capital expenditures contracted for by the Group at the balance sheet date but are not yet necessary to be recognized on thebalance sheet are as follows:
| 31 December 2018 | 31 December 2017 | |||
| Buildings, machinery and equipment | 130,748,435 | 150,418,893 |
(2) Operating lease commitments
The future minimum lease payments due under the signed irrevocable operating leases contracts are summarized as follows:
| 31 December 2018 | 31 December 2017 | ||
| Within 1 year | 19,016,297 | 3,675,748 | |
| 1 to 2 years | 16,993,654 | 1,914,948 | |
| 2 to 3 years | 16,654,854 | 1,472,224 | |
| Over 3 years | 1,093,859 | 3,443,641 | |
| 53,758,664 | 10,506,561 |
12 Events after the balance sheet date
Statement of profit distribution after balance sheet date
| Amount | |
| Proposed distribution of cash dividends | 143,163,860 |
Pursuant to the resolution of the board of directors dated April 16, 2019, the board of directors proposed that the companydistribute cash dividends of RMB 143,163,860 to all shareholders, which has not yet been recognized as a liability in thefinancial statements. In addition, the board of directors proposes to use the capital of 2,863,277,201 as the base to transfer 1shares for every 10 shares to all shareholders in a total of 286,327,720 shares, which has not yet been reclassified as capital inthe financial statements.
13 Other significant events
(1) 171 million special funds for the introduction of talents was follow-up progress.
(a) Matter description
On December 10, 2012, the People's Government of Yichang City and the Company signed the Cooperation Agreement onFine Glass and Ultrathin Electronic Glass Project ;The management committee of Yichang High-tech Industrial DevelopmentZone agreed to establish a RMB 171 million talent fund as a special fund subsidy for the introduction of talents and theplacement of talented people. The company of Yichang CSG Polysilicon Co.Ltd. is responsible for formulating the housingresettlement subsidy program and supervising the use of this special fund.The funds were subsidized by the government to thecompany, but Yichang CSG Polysilicon Co., Ltd. received this amount and transferred it to Yichang Hongtai Real Estate Co.,Ltd. in full amount without proper approval from the company's board of directors and other relevant authorities. ( YichangHongtai Real Estate Co.,Ltd. is a company jointly indirect controlled by part of the former natural executives of the company.The company has no equity relationship with the company ) .Yichang CSG Polysilicon Co., Ltd. received the above fund andtransferred it to Yichang Hongtai Real Estate Co., Ltd. in full and also handled the accounting treatment according to thecollecting and paying. In 2017, Prior period accounting error from above matters was corrected by company.
(b) Subsequent progress
The company learned from bureau of the Shenzhen Economic Crime Investigation in January 2019. According to the criminalclues handed over by the Shenzhen Securities Regulatory Commission and Some suggestions provided by People ‘sProcuratorate of Shenzhen, then bureau of the Shenzhen Economic Crime Investigation decide and censored that Some of theformer senior management ( Zeng nan, etc) damaged the interests of listed companies and have taken criminal enforcementmeasures. By 31 December 2018, the investigation of the case was still in progress.
(c) Receivable talent fund from Yichang Hongtai Real Estate Co., Ltd.
| December 31, 2018 | December 31, 2017 | |||||||
| Book balance | Bad debt preparation | Book balance | Bad debt preparation | |||||
| Other receivables | Yichang Hongtai Real Estate Company(i) | 171,000,000 | (3,420,000) | 171,000,000 | (3,420,000) | |||
(i)Yichang Hongtai Real Estate Co., Ltd. was no longer associated with the Group since 2018.
14 Financial instrument and risk
The Group's activities expose it to a variety of financial risks: market risk (primarily foreign exchange risk and interest raterisk), credit risk and liquidity risk. The Group's overall risk management program focuses on the unpredictability of financialmarkets and seeks to minimize potential adverse effects on the Group's financial performance.
(1) Market risk
(a) Foreign exchange risk
The Group’s major operational activities are carried out in Mainland China and a majority of the transactions aredenominated in RMB. Some export business, however, is denominated in foreign currencies. In addition, the Group isexposed to foreign exchange risk arising from the recognized assets and liabilities, and future transactions denominated inforeign currencies, primarily with respect to US dollars and Hong Kong dollar. The Group monitors the scale of foreigncurrency transactions, foreign currency assets and liabilities, and adjust settlement currency of export business, to furthestreduce the currency risk.
As at 31 December 2018, book values in RMB equivalent of the Group’s assets and liabilities denominated in foreigncurrencies are summarized below:
| 31 December 2018 | |||||||
| USD | HKD | Others | Total | ||||
| Financial assets denominated in foreign currency - | |||||||
| Cash at bank and on hand | 81,350,525 | 1,383,594 | 1,304,925 | 84,039,044 | |||
| Receivables | 118,697,795 | 1,372,872 | 7,429,706 | 127,500,373 | |||
| 200,048,320 | 2,756,466 | 8,734,631 | 211,539,417 | ||||
| Financial liabilities denominated in foreign currency - | |||||||
| Short-term borrowings | - | 65,715,000 | - | 65,715,000 | |||
| Payables | 56,170,817 | 269 | 12,397,080 | 68,568,166 | |||
| 56,170,817 | 65,715,269 | 12,397,080 | 134,283,166 |
| 31 December 2017 | |||||||
| USD | HKD | Others | Total | ||||
| Financial assets denominated in foreign currency - | |||||||
| Cash at bank and on hand | 74,120,750 | 6,114,383 | 112,007 | 80,347,140 | |||
| Receivables | 127,354,518 | 9,654,366 | 7,387,101 | 144,395,985 | |||
| 201,475,268 | 15,768,749 | 7,499,108 | 224,743,125 | ||||
| Financial liabilities denominated in foreign currency - | |||||||
| Short-term borrowings | - | 62,692,500 | - | 62,692,500 | |||
| Payables | 104,040,185 | 257 | 36,939,407 | 140,979,849 | |||
| 104,040,185 | 62,692,757 | 36,939,407 | 203,672,349 | ||||
As at 31 December 2018, if the currency had strengthened/weakened by 10% against the USD while all other variables hadbeen held constant, the Group’s net profit for the year would have been approximately RMB12,229,588 lower/higher (31December 2017: approximately RMB8,281,982 lower/higher) for various financial assets and liabilities denominated in USD.
As at 31 December 2018, if the currency had strengthened/weakened by 10% against the HKD while all other variables hadbeen held constant, the Group’s net profit for the year would have been approximately RMB5,351,498 higher/lower (31December 2017: approximately RMB3,988,541higher/lower ) for various financial assets and liabilities denominated inHKD.
Other changes in exchange rate had no significant influence on the Group's operating activities.
(b) interest rate risk
The Group's interest rate risk arises from long-term interest bearing debts including long-term borrowings and bonds payable.Financial liabilities issued at floating rates expose the Group to cash flow interest rate risk. Financial liabilities issued at fixedrates expose the Group to fair value interest rate risk. The Group determines the relative proportions of its fixed rate andfloating rate contracts depending on the prevailing market conditions. As at 31 December 2018, the Group’s long-terminterest-bearing debts at and fixed rates and floating rates are illustrated below:
| 31 December 2018 | 31 December 2017 | ||
| Debt at fixed rates | 2,258,325,000 | 1,425,000,000 | |
| Debt at floating rates | 57,375,000 | 129,120,000 | |
| 2,315,700,000 | 1,554,120,000 |
The Group continuously monitors the interest rate position of the Group. Increases in interest rates will increase the cost ofnew borrowing and the interest expenses with respect to the Group’s outstanding floating rate borrowings, and thereforecould have a material adverse effect on the Group’s financial position. The Group makes adjustments timely with reference tothe latest market conditions, which includes increasing/decreasing long-term fixed rate debts at the anticipation ofincreasing/decreasing interest rate.
(2) Credit risk
Credit risk is managed on the grouping basis. Credit risk mainly arises from cash at bank, notes receivable, accountsreceivable, other receivables.
The Group expects that there is no significant credit risk associated with cash at bank since they are mainly deposited atstate-owned banks and other medium or large size listed banks. Management does not expect that there will be anysignificant losses from non-performance by these counterparties. Furthermore, as the Group’s bank acceptance notesreceivable are generally accepted by the state-owned banks and other large and medium listed banks, management believesthe credit risk should be limited.
In addition, the Group has policies to limit the credit exposure on accounts receivable, other receivables and trade acceptancenotes receivable. The Group assesses the credit quality of and sets credit limits on its customers by taking into account theirfinancial position, the availability of guarantee from third parties, their credit history and other factors such as current marketconditions. The credit history of the customers is regularly monitored by the Group. In respect of customers with a poorcredit history, the Group will use written payment reminders, or shorten or cancel credit periods, to ensure the overall creditrisk of the Group is limited to a controllable extent.
(3) Liquidity risk
Cash flow forecasting is performed by each subsidiary of the Group and aggregated by the Group’s finance department in itsheadquarters. The Group’s finance department at its headquarters monitors rolling forecasts of the Group's short-term andlong-term liquidity requirements to ensure it has sufficient cash reserve, while maintaining sufficient headroom on itsundrawn committed borrowing facilities from major financial institutions so that the Group does not breach borrowing limitsor covenants on any of its borrowing facilities to meet the short-term and long-term liquidity requirements.
As stated in Note 2(1) above, as at 31 December 2018, the Group had net current liabilities of approximately RMB1.267billion and committed capital expenditures of approximately RMB0.131 billion. Management will implement the followingmeasures to ensure the liquidation risk limited to a controllable extent:
(a) The Group will have steady cash inflows from operating activities;(b) The Group will pay the debts that mature and finance the construction projects through the existing bank facilities;(c) The Group will closely monitoring the payment of construction expenditure in terms of payment time and amount.
The financial liabilities of the Group at the balance sheet date are analyzed by their maturity date below at their undiscountedcontractual cash flows:
| 31 December 2018 | |||||||||
| Within 1 year | 1 to 2 years | 2 to 5years | Over 5 years | Total | |||||
| Short-term borrowings | 2,991,136,478 | - | - | - | 2,991,136,478 | ||||
| Notes payable/Accounts payable | 1,315,009,263 | - | - | - | 1,315,009,263 | ||||
| Other payables | 552,751,187 | - | - | - | 552,751,187 | ||||
| Other current liabilities | 300,000 | - | - | - | 300,000 | ||||
| Current portion of non-Current liabilities | 821,135,376 | - | - | - | 821,135,376 | ||||
| Long-term payables | - | 529,910,796 | - | - | 529,910,796 | ||||
| Long-term borrowings | 134,337,188 | 1,403,773,698 | 1,044,119,211 | - | 2,582,230,097 | ||||
| 5,814,669,492 | 1,933,684,494 | 1,044,119,211 | - | 8,792,473,197 | |||||
| 31 December 2017 | |||||||||
| Within 1 year | 1 to 2 years | 2 to 5 years | Over 5 years | Total | |||||
| Short-term borrowings | 3,810,013,826 | - | - | - | 3,810,013,826 | ||||
| Notes payable/Accounts payable | 1,613,567,664 | - | - | - | 1,613,567,664 | ||||
| Other payables | 653,357,094 | - | - | - | 653,357,094 | ||||
| Other current liabilities | 300,000 | - | - | - | 300,000 | ||||
| Current portion of non-current liabilities | 911,348,902 | - | - | - | 911,348,902 | ||||
| Long-term payables | - | 600,436,759 | 561,357,488 | 1,161,794,247 | |||||
| Long-term borrowings | 80,169,450 | 117,889,436 | 1,580,649,809 | - | 1,778,708,695 | ||||
| 7,068,756,936 | 718,326,195 | 2,142,007,297 | - | 9,929,090,428 | |||||
15 Fair value estimates
Based on the lowest level input that is significant to the fair value measurement in its entirety, the fair value hierarchy has thefollowing levels:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly orindirectly.
Level 3: Unobservable inputs for the asset or liability.
(a) Financial instruments measured at fair value
As of 31 December 2018, the group has no assets measured at fair value.
(b) Financial instruments not measured but disclosed at fair value
The group’s financial assets and financial liabilities measured at amortized cost mainly include: accounts receivable,short-term borrowings, accounts payable, long term borrowings, bonds payable , long-term payables, ect.
Except for financial liabilities listed below, book value of the other financial assets and liabilities not measured at fair value isa reasonable approximation of their fair value.
| 31 December 2018 | 31 December 2017 | ||||||
| Carrying amount | Fair value | Carrying amount | Fair value | ||||
| Financial liabilities | |||||||
| Medium term notes | 2,000,000,000 | 2,028,614,800 | 1,200,000,000 | 1,171,444,800 | |||
| 2,000,000,000 | 2,028,614,800 | 1,200,000,000 | 1,171,444,800 | ||||
The fair values of medium-term notes are the present value of the contractually determined stream of future cash flows at therate of interest applied at that time by the market to instruments of comparable credit status and providing substantially thesame cash flows on the same terms, there into medium term notes belong to Level 2.
16 Capital management
The Group’s capital management policies aim to safeguard the Group’s ability to continue as a going concern in order toprovide returns for shareholders and benefits for other stakeholders, and to maintain an optimal capital structure to reduce thecost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, refundcapital to shareholders, issue new shares or sell assets to reduce debts.
The Group is not subject to external mandatory capital requirements, and monitors capital on the basis of gearing ratio.
As at 31 December 2018 and 31 December 2017, the Group's gearing ratio is as follows:
| 31 December 2018 | 31 December 2017 | ||
| Total liabilities | 9,664,801,722 | 10,755,379,257 | |
| Total assets | 19,114,234,184 | 19,535,002,368 | |
| Gearing ratio | 51% | 55% |
17 Notes to the Company’s financial statements
(1) Other receivables
| 31 December 2018 | 31 December 2017 | ||
| Receivables from related parties | 2,739,449,549 | 2,399,392,648 | |
| Others | 176,598,669 | 4,451,192 | |
| 2,916,048,218 | 2,403,843,840 | ||
| Less: Provision for bad debts | (3,531,973) | (3,509,024) | |
| 2,912,516,245 | 2,400,334,816 |
(a) The ageing of other receivables is analysed as follows:
| 31 December 2018 | 31 December 2017 | ||
| Within 1 year | 2,744,831,250 | 2,232,668,334 | |
| Over 1year | 171,216,968 | 171,175,506 | |
| 2,916,048,218 | 2,403,843,840 |
As at 31 December 2018, the Company had no overdue but not impaired other receivables (31 December 2017: Nil).
(b) Other receivables are analysed by categories as follows:
| 31 December 2018 | 31 December 2017 | ||||||||||
| Carrying amount | Provision for bad debts | Carrying amount | Provision for bad debts | ||||||||
| Amount | % of total balance | Provision for bad debts | % | Amount | % of total balance | Provision for bad debts | % | ||||
| Provision for bad debts by groupings | |||||||||||
| - Group 1 | 176,598,669 | 6% | (3,531,973) | 2% | 4,451,192 | - | (89,024) | 2% | |||
| - Group 2 | 2,739,449,549 | 94% | - | - | 2,399,392,648 | 100% | (3,420,000) | - | |||
| 2,916,048,218 | 100% | (3,531,973) | - | 2,403,843,840 | 100% | (3,509,024) | - |
(c) Or other receivables provided for bad debts by portfolio, the percentage of provision for the portfolio is as follows:
| 31 December 2018 | 31 December 2017 | ||||||||
| Carrying amount | Provision for bad debts | Carrying amount | Provision for bad debts | ||||||
| Amount | Amount | % | Amount | Amount | % | ||||
| Portfolio 1 | 176,598,669 | (3,531,973) | 2% | 4,451,192 | (89,024) | 2% | |||
| Portfolio 2 | 2,739,449,549 | - | - | 2,399,392,648 | (3,420,000) | - | |||
| 2,916,048,218 | (3,531,973) | - | 2,403,843,840 | (3,509,024) | - | ||||
(d) As at 31 December 2018, the Group’s top five entities with the largest other receivables balances are summarised as below:
| Relationship with the Group | Amount | Ageing | % of total balance | |
| Yichang CSG Polysilicon | Subsidiary | 1,640,114,921 | Within 1 year | 56% |
| Yichang CSG Display | Subsidiary | 294,484,589 | Within 1 year | 10% |
| Qingyuan CSG Energy-Saving | Subsidiary | 192,435,333 | Within 1 year | 7% |
| Yichang Hongtai Real Estate Co. Ltd | Independent third party | 171,000,000 | 4 to 5 years | 6% |
| Shenzhen CSG PV Energy Co., Ltd. | Subsidiary | 137,714,602 | Within 1 year | 5% |
| 2,435,749,445 | 84% |
(2) Long-term equity investments
| 31 December 2018 | 31 December 2017 | ||
| Subsidiaries (a) | 4,979,696,831 | 4,810,987,652 | |
| Less: Impairment provision for investments in subsidiaries (a) | (15,000,000) | (15,000,000) | |
| 4,964,696,831 | 4,795,987,652 |
(a) Subsidiaries
| Movement in current year | |||||||||||||||
| 31 December 2017 | Additional investment | Decrease in investment | Provision for impairment loss | 31 December 2018 | Provision for impairment loss | Cash dividends declared in current year | |||||||||
| (i) | (i) | ||||||||||||||
| Chengdu CSG | 146,977,347 | 5,399,177 | - | - | 152,376,524 | - | 109,907,648 | ||||||||
| Sichuan CSG Energy Conservation | 115,546,714 | 4,507,100 | - | - | 120,053,814 | - | - | ||||||||
| Tianjin Energy Conservation | 243,191,428 | 5,357,457 | - | - | 248,548,885 | - | - | ||||||||
| Dongguan CSG Engineering | 193,916,049 | 5,296,789 | - | - | 199,212,838 | - | - | ||||||||
| Dongguan CSG Solar | 349,801,154 | 6,439,022 | - | - | 356,240,176 | - | 77,182,596 | ||||||||
| Yichang CSG Polysilicon | 633,464,168 | 8,947,932 | - | - | 642,412,100 | - | - | ||||||||
| Wujiang CSG Engineering | 251,516,189 | 3,525,424 | - | - | 255,041,613 | - | - | ||||||||
| Hebei CSG | 262,265,341 | 4,788,173 | - | - | 267,053,514 | - | - | ||||||||
| China Southern Glass (Hong Kong) Limited | 85,802,602 | 1,130,027 | - | - | 86,932,629 | - | - | ||||||||
| Wujiang CSG | 562,527,754 | 6,221,992 | - | - | 568,749,746 | - | - | ||||||||
| Hebei Shichuang | 243,271,470 | 3,779,667 | - | - | 247,051,137 | - | - | ||||||||
| Jiangyou CSG Mining Development Co. Ltd. | 100,837,599 | 1,928,053 | - | - | 102,765,652 | - | - | ||||||||
| Xianning CSG | 177,295,494 | 4,614,617 | - | - | 181,910,111 | - | - | ||||||||
| Xianning CSG Energy-Saving | 161,543,844 | 4,755,349 | - | - | 166,299,193 | - | 44,447,363 | ||||||||
| Qingyuan CSG Energy-Saving | 300,376,848 | 3,484,710 | - | - | 303,861,558 | - | - | ||||||||
| Shenzhen CSG Financial Leasing Co., Ltd. | 133,500,000 | - | - | - | 133,500,000 | - | - | ||||||||
| Shenzhen CSG PV Energy Co., Ltd. | 100,052,985 | 309,562 | - | - | 100,362,547 | - | - | ||||||||
| Shenzhen CSG Display | 542,691,888 | 9,825,410 | - | - | 552,517,298 | - | - | ||||||||
| Xianning CSG Photoelectric | 38,470,534 | 52,000,967 | - | - | 90,471,501 | - | - | ||||||||
| Others (ii) | 167,938,244 | 36,397,751 | - | - | 204,335,995 | (15,000,000) | - | ||||||||
| 4,810,987,652 | 168,709,179 | - | - | 4,979,696,831 | (15,000,000) | 231,537,607 | |||||||||
(i) As at 31 December 2018, included in the investments in subsidiaries were deemed investment costs of RMB 211,291,520 (31
December 2017: RMB 114,582,341), the fair value of the equity instruments of the Company granted to the employee of thesubsidiaries for their serviced provided to the subsidiaries for which the Company did not charge the subsidiaries.
(ii) The operations of the subsidiaries against which provision was made were basically ceased. The Company made provision against
the long-term investment in these subsidiaries based on their recoverable amounts in previous years.
(3) Long-term receivables
| 31 December 2018 | 31 December 2017 | ||
| Bonds payable and long-term borrowings allocated to subsidiaries | 1,200,000,000 | 1,200,000,000 | |
| 1,200,000,000 | 1,200,000,000 | ||
| Less: Provisions for impairment | - | ||
| 1,200,000,000 | 1,200,000,000 |
| 31 December 2017 | Movements in current year | 31 December 2018 | Provision for impairment loss | Reversals of provision for impairment loss in current year | |||||
| Chengdu CSG | 50,000,000 | - | 50,000,000 | - | - | ||||
| Sichuan CSG Energy Conservation | 20,000,000 | - | 20,000,000 | - | - | ||||
| Dongguan CSG PV-tech | 50,000,000 | - | 50,000,000 | - | - | ||||
| Yichang CSG Polysilicon | 350,000,000 | - | 350,000,000 | - | - | ||||
| Dongguan CSG Engineering | 75,000,000 | - | 75,000,000 | - | - | ||||
| Wujiang CSG | 210,000,000 | - | 210,000,000 | - | - | ||||
| Dongguan CSG Solar | 120,000,000 | - | 120,000,000 | - | - | ||||
| Wujiang CSG Engineering | 50,000,000 | - | 50,000,000 | - | - | ||||
| Qingyuan CSG Energy-Saving | 50,000,000 | - | 50,000,000 | - | - | ||||
| Xianning CSG Energy-Saving | 80,000,000 | - | 80,000,000 | - | - | ||||
| Xianning CSG | 75,000,000 | - | 75,000,000 | - | - | ||||
| Hebei CSG | 50,000,000 | - | 50,000,000 | ||||||
| Hebei shichuang | 20,000,000 | - | 20,000,000 | - | - | ||||
| 1,200,000,000 | - | 1,200,000,000 | - | - |
(4) Other payables
| 31 December 2018 | 31 December 2017 | ||
| Interest payable | 41,572,125 | 3,090,735 | |
| Dividend payable | 2,846,362 | - | |
| Other payables | 1,624,168,731 | 909,432,991 | |
| 1,668,587,218 | 912,523,726 |
1. Interest payable
| 31 December 2018 | 31 December 2017 | ||
| Interest payable for medium term notes | 37,644,444 | - | |
| Interest payable for short-term borrowings | 3,927,681 | 3,090,735 | |
| 41,572,125 | 3,090,735 |
2. Dividend payable
| 31 December 2018 | 31 December 2017 | ||
| Restricted share dividend payable | 2,846,362 | - | |
| 2,846,362 | - |
3. Other payables
| 31 December 2018 | 31 December 2017 | ||
| Subsidiaries | 1,339,762,543 | 477,067,694 | |
| Share repurchase | 275,748,309 | 417,349,879 | |
| Others | 8,657,879 | 15,015,418 | |
| 1,624,168,731 | 909,432,991 |
(5) Investment income
| 2018 | 2017 | ||
| Investment income from long-term equity investment under cost method | 231,537,607 | 436,068,825 | |
| 231,537,607 | 436,068,825 |
There is no significant restriction on the remittance of investment income to the Company.
I Statement of non-recurring gains and losses
| 2018 | 2017 | ||
| Gains or losses on disposal of non-current assets | 454,368 | 1,768,993 | |
| Government grants recognized in profit or loss for current period | (94,835,539) | (87,875,417) | |
| Investment losses from disposal of financial liabilities at fair value through profit or loss | - | (427,636) | |
| Income from external entrusted loans | (534,591) | - | |
| Non-operating income and expenses other than aforesaid items | (12,099,680) | (12,076,848) | |
| (107,015,442) | (98,610,908) | ||
| Effect of income tax | 16,483,870 | 16,209,135 | |
| Effect of minority interests (after tax) | 5,145,472 | 2,386,569 | |
| Total non-recurring gains and losses | (85,386,100) | (80,015,204) |
(1) Basis for preparation of statement of non-recurring gains and losses
Under the requirements in Explanatory Announcement No. 1 on Information Disclosure by Companies Offering Securities to thePublic – Non-recurring Profit or Loss [2008] from CSRC, non-recurring profit or loss refer to those arises from transactions andevents that are not directly relevant to ordinary activities, or that are relevant to ordinary activities, but are extraordinary and notexpected to recur frequently that would have an influence on users of financial statements making economic decisions on thefinancial performance and profitability of an enterprise.
II Return on net assets and earnings per share
| Weighted average return on net assets (%) | Earnings per share | |||||
| Basic earnings per share | Diluted earnings per share | |||||
| 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | |
| Net profit attributable to ordinary shareholders of the Company | 5.16% | 10.15% | 0.16 | 0.30 | 0.16 | 0.29 |
| Net profit attributable to ordinary shareholders of the Company after deducting non-recurring gains and losses | 4.19% | 9.16% | 0.13 | 0.27 | 0.13 | 0.26 |
Section X. Documents Available for Reference
I. Text of the financial report carrying the signatures and seals of the legal representative, responsible person incharge of accounting and person in charge of financial institution;
II. Original of the Auditors’ Report carrying the seal of Asia Pacific (Group) CPAs (special general partnership)and the signatures and seals of the certified public accountants;
III. All texts of the Company’s documents and original public notices disclosed in the website and papersappointed by CSRC in the report period.
IV. The reports which published in the other stock market.
Board of Directors ofCSG Holding Co., Ltd.17 April 2019